On-Demand Taxi Startup or Taxi Dispatch Business. Which Is Better?

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If you have any idea to start a taxi startup then surely you would be in a dilemma on whether to choose the on-demand model or the latest taxi dispatch model. Here I have explained both the model and finally arrived at a conclusion. The conclusion is not what you think and it gives more insight to you.

On-demand taxi startup

On-demand taxi startups are a revamped version of the traditional/conventional taxi companies. The taxi startups disrupted an industry that is some decades old. GPS map is one of the major components used in the taxi app and they made all the difference. GPS enables both the driver and rider to easily find the route and book a cab respectively.    

Not to mention that on-demand taxi startup opened the doors of the now hit on-demand market. Several on-demand startups in other areas started to emulate their model to replicate their success.

Top 3 taxi startups in the world alone are valued at $140 billion in 2019. Barring top taxi booking startups, many small entrepreneurs started their own on-demand taxi firms in their region and the success rate is also good.

To the question of how the online taxi booking industry achieved such growth when many companies struggled for decades to come to this stature? The answer for it is, the traditional taxi companies experienced a dearth of innovation and their users starved for a change. So, when a solution came in the form of taxi apps, it was not very difficult to revolutionize this industry which is on the verge of disruption.

Taxi app business has always been a favorite for serial entrepreneurs and on-demand enthusiasts. Nonetheless, they too have some pros and cons. Let us see them one by one from the business perspective.

Pros

  • On-demand taxi startups follow the less ownership model. You don’t need to own any vehicle instead, attach cabs along with drivers. For every ride you can take some commission and rest goes to the driver.
  • Overall running cost is low as there is no maintenance cost, fuel cost, and driver salary. The only cost is to maintain the app solution.
  • No need to hail a taxi in the middle of the road. It is inconvenient and fare may be exorbitant.

Cons

  • The competition is very high since the top players in this market has huge investor backup.
  • Even though the initial investment is low you need to provide a lot of discounts, cashbacks, incentives, etc to retain customers for a long time.

Taxi dispatch system

The conventional taxi companies worked using the taxi dispatch model. In the taxi dispatch model the riders need to book a taxi via a call or hail a taxi in the streets. When booked using a call, the taxis are sent to the rider’s place from the dispatch station. This method is irrelevant now but the same model is improvised with latest technologies and mobile apps and has been developed on par with the on-demand model.

The new taxi dispatch model has become a boon to the conventional taxi firms who were unable to transform to the on-demand model.

Present taxi dispatch software consists of the customer app, admin app, and dispatcher app. The customer books a taxi in his app and the dispatcher sends a taxi from the station to the customer destination. So, the limitations in the traditional dispatch system are eliminated in the present model.

Pros

  • Very less competition and more sustainable than on-demand business.
  • Very high-profit margin because of no intermediaries and running cost is low.
  • No problem of assigning rides to the drivers.

Cons

  • The initial cost is high since the taxis are owned not attached by third parties.
  • Way of booking the taxi is always a notch lesser than the on-demand taxi.
  • Dispatch station infrastructure is necessary

Which is better?

There is no one word answer to which is better. Each model has its own specialties. Selecting the best model for your taxi business depends on the factors like your budget, locality, local trend, long term goal, etc.

Let me tell you how to select the apt business model based on your budget. If you want to bootstrap your taxi company then, on-demand booking model is right for you. After reaching a certain point of stability you can completely or partially change to the dispatch model.

On the contrary, if you have sufficient funds to start a taxi dispatch company you straightaway start it since it is promising and sustainable in the long term.

Similarly, you can use other factors to choose the model for your taxi startup.

How we can help you?

We have a flexible taxi solution called SpotnRides. SpotnRides is so flexible that it can be easily tweaked to function as an on-demand taxi booking system and taxi dispatch system. So, for any of the taxi business models, SpotnRides can be applied. We have it as a prebuilt solution and our skilled development team have the experience and competence to make any changes to it.

As for our on-demand taxi solution, it is an exact replica of the taxi app Uber. On request, we are ready to add more distinct features in the app.

And for the taxi dispatch system, we can also provide a fleet management system which can reduce operating costs by managing the taxis.

Route optimization, Heat map, data analytics integrated admin dashboard, fare estimation, driver rating, and review are some of the common unique features in SpotnRides taxi app solution.

Decide fast and come to us. For any doubts and queries regarding our making of on-demand taxi and taxi dispatch system using SpotnRides, please drop a message to hello@spotnrides.com. You can also call anytime and we are available to answer you round the clock.

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About the author

Steven

I am working as a Senior product developer and have developed and delivered Web and Mobile products for numerous clients.

By Steven