Taxi App Development: A Properly Crafted Algorithm is the Key To Success. Get Insight Into Uber’s AI Enabled Algorithm
Posted on May 4, 2019 By Vishal Virani
Algorithmically fueled approach for an online business is the wisest decision you can make as a business owner. Because an algorithm is the most important part of the mobile app. It makes the app intelligent enough to perform calculation, data processing, and automated reasoning. Users using the mobile app to solve their daily life problems may find the working of the app magical as they are not aware of the hidden algorithm providing the ability to the app to work according to the given commands. A well-written and well-implemented algorithm justifies the core purpose of the app and delivers the best services to the users. But in the case of the poorly written algorithms, an app will not able to offer the best possible solution to the users.
Needs for a proper algorithm for taxi app business
Talking specifically about the taxi app and taxi app development process, writing a suitable algorithm is the key task to perform in order to achieve high user satisfaction rate. Till 2015, Uber was working on a basic algorithm. But from 2015, Uber is making constant changes in the algorithms and has powered them with machine learning and Artificial intelligence. Following graph clearly shows us that the comparison of satisfaction rate of the Uber drivers between the year 2017 and the year 2018. In the year 2017, 49.4% of the Uber drivers were satisfied with the Uber, while in 2018, that number reached 58.2% – 9% of the increase.
Image source: https://therideshareguy.com/
A properly crafted algorithm also works properly with the business model and gives you the sight of always growing revenue graph. Following graph depicts magnification in Uber’s revenue graph with the time, with the enhancement in the algorithm.
Image source: http://www.businessofapps.com/data/uber-statistics/
After reading this data, you must be wondering which is the algorithm that uber has implemented and how can you use such an effective algorithm when you consider personalized taxi app development. Let’s understand it in details. But before learning about Uber’s algorithm, there are few fundamentals you should know.
Fundamentals of taxi app and taxi app algorithm
It is better known to everyone that the purpose of having a taxi app is to connect the drivers with the riders for the A to B journey. But the way a taxi app justifies its purpose is the thing which matters the most here.
Let’s start with the number of people involved in a taxi app business. You may find it strange, but running a successful taxi business through the app can possible with only three elements. They are a rider, a driver and an algorithm. Rider books the ride, the driver accepts the request and reaches to the rider to pick him up. An algorithm matches the best driver for the rider. Thus, Intelligent matching is crucial for the success of the taxi app. Because with the proper match, a rider gets his ride more quickly and thus it proves to be time- saving for both driver and rider.
Another fundamental you need to know for your taxi app before going for taxi app development is dynamic pricing. Dynamic pricing is the business strategy used by all major ride-sharing companies. With the Dynamic pricing strategy, a ride-sharing company gets the advantage of the high demand and generates more revenue in peak hours. But deciding the short term pricing is the challenge all ride-sharing companies are facing as there are so many factors affecting the dynamic pricing. To study those factors in real time and set the price which exactly meets the demand is something too tedious for humans, but an algorithm can do.
So, it is recommended to consider matching and pricing as the major points while writing an algorithm for your taxi app. If we check out Uber’s algorithm, it is based on these two fundamentals too.
How does Uber’s algorithm work?
Working of Uber’s algorithm is based on two fundamentals that we have previously stated. Let’s start with intelligent matching. An intelligent matching takes the privilege of finding the most suitable driver for the rider.
Batched Matching Algorithm
Until 2015, Uber’s algorithm was working in such a way that it chose the nearest driver available to the rider for the ride. This method had a few disadvantages. There is always a possibility that even the nearest driver could not reach the rider in minimum time. Geographical Factors like one-way streets, rivers, bridges, and traffic are affecting the ETA time of the drivers. Uber had to fix these issues. Uber wanted to lower wait time for the riders and they also wanted to have a higher business for their drivers. Thus, Uber developed a new matching algorithm and named it batched matching. To understand, how does batched matching actually work, let’s go through an example.
The following image demonstrates one situation. Rider A and Rider B both have requested the Uber. The nearest driver of rider A has been assigned to him and nearest driver of rider B has been assigned to him. ETA for Rider A is 2 minute, while ETA for rider B is 9 minute, total 11 minute of waiting in the system.
Now, the magic happens. Following is the result of Uber’s batched matching algorithm. The algorithm puts these two riders and drivers into a batch and finds out the perfect drivers for each of the riders while making sure that the overall ETA of drivers of one batch will remain minimum. With the Batched matching algorithm, the overall waiting time is reduced to 8 minutes from the previously recorded 11 minutes. This less ETA makes both riders and drivers happy by ending unnecessary wait time.
Dynamic pricing algorithm
Dynamic pricing is not a new concept. It is a widely adopted concept in the online taxi business. When the demand increases, the fare prices of the ride go higher. Dynamic pricing helps taxi companies to get everything out of the high demand. Apart from this, this dynamic pricing module works on the drivers’ side too. When the demand is high, drivers also get more money per KM than usual. This is called surge or boost for the drivers. Concept of surge or boost attracts more drivers to get live on the roads during the time of high demand.
Uber’s dynamic pricing algorithm which is based on machine learning and AI, studies several factors like weather, traffic, and local events to generate the short term prediction. Algorithm predicts how many riders and how many drivers will open the app in the next 5 to 10 minutes, and it converts that data into surge multiple. Surge multiple is nothing but the multiple over the base fare. If the surge multiple is two, then riders need to pay twice as much, and the drivers also get paid twice as much as the base fare.
What is the cost for taxi app development with the AI enabled Algorithm?
It is a very strong statement to make that the reason behind Uber’s success is its intelligent algorithm which works keeping the users’ priority ahead of everything. Without the intelligently crafted algorithm, your taxi app will not able to justify the core purpose of the app.
If you wish to build a taxi app, you should know that the pricing of each module depends on the features included in it and the time taken for development. Here is a price structure to build your basic taxi app.
After knowing the algorithm behind the taxi app and cost of developing a taxi app, if you are pondering about what are the common features an unsurpassed taxi app should have, here’s a list.
Can you start you own taxi rental business?
There are hot opportunities in Taxi rental service business around the world. You can also step in this business and start generating a good revenue. The only thing that you need to be accessible to your target audience is to have your own mobile app. You can reach thousands of people just by going online.
Map, Routing, GPS tracking
It is an unbeatable fact that working of a taxi app is highly based on geological factors. Rider books the ride and driver gets the request only after algorithm studies the geological factors. Then, the driver gets the exact location of the rider through the map. And while the driver is on the way to pick the rider up, rider tracks his location in real time.
Push notification is another must feature of the taxi app. whenever, a rider books the taxi, request sends to the driver in the form of notification. when the driver accepts that notification, confirmation of ride with the car type and driver’s details sends to the riders.
A sustainable payment method gives a seamless experience to the riders while making the payment. Thus allowing the users to pay in different ways. In most of the regions, uber is using the PayPal payment gateway. You can choose any time of payment gateway that supports split payment.
While a rider is in the cab, the driver and the taxi company is responsible for the rider’s safety. In fact, many countries have developed new laws for the sake of a rider’s safety. Thus most of the taxi app provider companies have added a feature providing a direct way of connecting the emergency services to the riders in the case of an emergency.
Drivers are the most valuable asset of taxi companies as they are having direct communication with the users of the taxi app. To provide worth to remember service, taxi companies put emphasis on the drivers’ profile. They let users know the history of the driver with the overall rating and recent comments of the other riders.
Ride-scheduling is the most productive idea of taxi companies. Basically, ride scheduling functionality of taxi app allows users to book a taxi prior to the journey. It saves time for both riders and drivers.
At Coruscate, we have delivered many successful taxi app. Our team has expertise in writing and implementing AI integrated algorithm for your taxi app. To make sure your next taxi app has a potent algorithm that works parallel with the business model, users’ needs, and the core purpose of the app, contact us today. You can even ask for a free demo through the contact us form.
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