Research On Pricing Strategy Of Taxi APP Platform

Calling a taxi is a longstanding problem at metropolis, especially at rush hour. Recently there has existed a new approach to solve this problem. Using the LBS technology, the Taxi APP eased the problems of that “Taxi difficulty” for passengers and “high empty rates” for drivers from information asymmetry. Meantime, under the boom of mobile commerce and O2 O,the Taxi APP possess the entrance value to O2 O and potential of creating scenarios for mobile payments, demonstrating it of great commercial value. However, the profit model in the Taxi APP market is not explicit. Previously huge subsidies cultivating the market are not sustainable in the long run. Therefore, it is necessary and unavoidable to establish a clear profit model and pricing strategy for the Taxi APP platform.As a platform providing services for both passengers and drivers, the Taxi APP belongs to typical Two-Sided market. Referring to the basic pricing strategy of Two-Sided markets, this paper firstly constructed a theoretical model of Two-Sided market, including drivers, passengers and Taxi APP platform, and respectively analyzed the pricing strategies of Taxi APP platform under the monopoly and competitive market structure, then deeply explored the equilibrium profit platform, pricing influence and direction of action under different pricing models.The results show that:(1)Under Two-sided market, the charges to passengers and drivers not only relate to each marginal cost and elasticity of demand for platform, but also depend on the cross-group network externalities each generated.(2)There exists a positive relationship between the degrees of horizontal differentiation that affects the users’ utility from the Taxi APP platform and the charges to users and equilibrium profit of platform under both Two-sided and Multi-Sided market. So it is wiser choice for the Taxi APP platform to implement the differentiated business strategy.(3)In the “multi-sided market”, the charges to passengers will be reduced, which attributed to positive cross-group network externalities generated from the passengers. And the higher the probability that passengers contact the ad, the lower the charges to passengers will be. The conclusions of this paper offer good explanation for some pricing behaviors of Taxi APP corporates, meantime contribute to establishing profit model and pricing strategy of Taxi APP corporates as reference.