Forgive my terribly silly question then. If Uber is skirting the regulatory cost of a medallion for each vehicle in service, why is the cost the same as a taxi paying that expense?

Because it turns out the medallion cost is only a small part of the operating cost of a cab.

"TLC’s medallions held by fleet owners, who collect rent of up to $132 a shift from drivers"[1]

NYC cabs run on 2 12-hour shifts a day. This works out to ~$13/hr to pay for the medallion itself. This isn't nothing, but ultimately the cost of the car, gas, insurance, etc, are still the dominant factors in operating a cab.

So yeah, theoretically without the medallion cost Ubers can be cheaper than a regular taxi, but probably not by all that much.

[1] http://www.thenewyorkworld.com/2014/01/20/taxi-medallions/

I don't remember the exact numbers, but I think renting a medallion for a year in New York is going to cost you several tens of thousands of dollars a year. With medallions costing 800k, it doesn't really matter whether you're renting by the shift or paying interest on a loan used to purchase the medallion, it's going to be a significant expense.

It makes a huge difference whether you're renting the medallion or paying for a loan for it - only the person in the latter case will ultimately be able to sell the medallion back once they're done with it.

The medallions are a perfect commodity and there's very little risk, and there are banks that specialize in loans for tax medallions, so the interest rates you can get for them is extremely low. Historically you'll very probably make more back on it than you ever paid for it.

Googling found me rates of about 4%-5% for a taxi medallion loan in NYC[1]. For an 800k medallion, that's 30k-40k a year in interest, which should still be giving a lot of wiggle room to a competitor not paying for medallions.

[1]https://www.brfcu.org/rates_loans.asp

The most recent announced average rate at the largest medallion loan bank is 4.06%:

http://www.medallionfinancial.com/news_release_14-11-03.htm

The historical average appreciation rate of medallions is 14%:

http://www.aei.org/publication/chart-of-the-day-nyc-taxi-med...

The differential between the loan rates and appreciation yields may be about as much as you make using it to actually drive the taxi:

http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-me...

> why is the cost the same as a taxi paying that expense

Uber is trying to maximize their revenue

Why would they do that? They have competition, even if it doesn't seem so obvious right now, and a larger percentage of nyc's cab market share seems much more valuable. Especially if it's so easy for them to raise money.

Can you really not think of reasons why they'd want to maximize revenue? Here are a few thoughts, off the top of my head: * room to drop prices at the right moment, when it would most affect competitors * more money in the bank means less pressure to raise money (before today; I'd guess this is the last big round they do). Less pressure means they can wait until they get a better deal for current stakeholders * they don't think price is the determining factor for market share. I'm seeing Uber and Lyft mutually differentiate corporate personality to avoid being commoditized for each other * people tend to judge safety / quality by price -- if they were 50% cheaper, people might be sketched out * maximizing revenue also maximizes money in their driver's pockets -- they need high quality, reliable drivers, and thus need to pay them decent wages.

Those are just a few reasons why they would maximize revenue pre-VC money.

Uber take quite a big cut don't they?

It's why I find it hard to helieve they can out-compete in cities where there's already an open market (medallions seem to be a weird US thing?)

Nop, they are common in Europe too. Although most european countries have severily limited the operation of Uber, so...

UberX pricing feels comparable, on average, to Yellow/Green Cabs for me, in Brooklyn. Sometimes it might be more expensive, sometimes less, but it mostly around the same. I take Uber probably 5-8 times a week.

UberX is almost always less expensive than a taxi. Certain NYC trips might be an exception.