Technical analysis:
1. Technology and Platform Development
App Development: The choice of technology should focus on a user-
friendly mobile application that offers secure registration, real-time
tracking, payment gateways, and a robust interface for both drivers
and customers. To ensure scalability, the app should be compatible
with both Android and iOS platforms.
Security Features: Features like SOS buttons, live location sharing,
driver and customer verification (using national ID and real-time facial
recognition), and ride history should be prioritized to address the
primary concern of safety for female customers.
Data Privacy and Safety: Ensure encryption of personal data
(compliant with Pakistan's data protection laws) and secure server
infrastructure. Cloud storage solutions may be utilized for scalability
and security.
2. Materials and Utilities
Required Inputs: The app development will require access to skilled
software developers, UI/UX designers, and cyber-security experts.
Additionally, servers or cloud infrastructure are necessary to support
the platform’s operations.
Utilities: A constant supply of internet, power, and hosting services
(cloud computing or local servers) will be essential for smooth
operation.
3. Capacity and Scalability
Initial Launch Capacity: Starting in key urban centers such as
Karachi, Lahore, and Islamabad will be optimal for testing demand,
given the density of potential customers. You can start with a
manageable number of drivers and gradually expand based on
demand.
Scalability: The technology should support scaling to smaller cities
and towns, with additional server capacity and resources being easily
expandable as demand grows.
4. Location and Infrastructure
Server Location: Hosting servers within Pakistan (or using reliable
cloud services like AWS or Microsoft Azure with regional data centers)
will reduce latency and improve the app’s performance.
Office Setup: Having a central office for operations in Karachi or
Lahore is recommended, as these cities offer a pool of skilled labor and
better infrastructure (internet, electricity).
5. Collaboration and Technical Know-How
Technical Collaboration: Collaborate with local app development
agencies for the software and security systems. Ensure that the
agreement includes support during design, maintenance, and training
for your in-house technical team.
Partnerships: Partnering with local telecom companies can enhance
in-app data usage services for customers.
6. Environmental Considerations
The environmental impact of this project is minimal, given that it’s
service-based rather than manufacturing. However, opting for eco-
friendly and fuel-efficient cars for drivers will align with modern
sustainability goals.
7. Project Layout and Implementation
Development Timeline: You need a project schedule involving app
development, testing, pilot launches, and full-scale rollouts.
Implementing a PERT/CPM schedule will ensure all stages are
monitored, especially when working with multiple teams (developers,
marketers, operations).
Pilot Testing: Begin with a pilot phase in a single city before
expanding nationally.
8. Market Adaptation
Technology Customization: The app should accommodate local
languages (Urdu) and payment methods (mobile wallets like EasyPaisa
and JazzCash).
Safety Focus: As this is a female-only service, ensure that marketing,
features, and branding revolve around safety and comfort to
differentiate the service from competitors like InDrive or Careem.
This technical analysis aims to cover the essential aspects of technology, capacity, inputs, and
infrastructure required to make your business operational and sustainable within the context of
Pakistan’s economy and market.
Explicit, implicit, and opportunity costs :-
In your ride-hailing business, understanding explicit, implicit, and opportunity costs is
essential for financial planning and decision-making. Here's how each cost type applies to your
business:
1. Explicit Costs
These are direct, out-of-pocket expenses your business will incur. Some examples include:
App Development and Maintenance: Payments made to
developers, UI/UX designers, security experts, and cloud services for
building and maintaining the app.
Salaries and Wages: Payments to your team, including tech support,
administrative staff, customer service, marketing, and operations.
Office Setup and Rent: Costs for leasing or buying office space,
utilities (electricity, internet), and office equipment.
Marketing and Advertising: Costs for promoting your app via social
media, print, or online ads, influencer marketing, and public relations
campaigns.
Vehicle Costs for Drivers: While drivers own their cars, there may be
costs related to car inspection, fuel discounts, insurance, or
maintenance support.
Licensing and Regulatory Fees: Fees to register your business,
obtain licenses to operate a ride-hailing service, and adhere to
government regulations (if required in Pakistan).
Insurance Costs: Payments for company-wide insurance policies to
cover potential liabilities, such as accidents or security breaches.
Transaction and Payment Fees: Costs associated with payment
gateways, mobile wallets (like JazzCash, EasyPaisa), and bank transfer
fees.
2. Implicit Costs
These are opportunity costs of using resources you already own or control, rather than incurring
explicit costs. Some examples include:
Founder’s Time and Expertise: The value of the time and expertise
you, as the owner or founders, contribute to the business without
taking a salary. This is an implicit cost because your time could have
been spent elsewhere, potentially earning income.
Use of Personal Assets: If you use personal assets, like a car for
initial ride-hailing service or a home office, you forgo the income you
could have earned by renting or using them for other purposes.
Forgone Interest: Any capital you invest in the business could have
been earning interest or dividends elsewhere (e.g., in a bank, stocks, or
another investment). The potential income from this capital is an
implicit cost.
3. Opportunity Costs
Opportunity costs represent the benefits you forgo by choosing one business decision over
another. Some examples for your ride-hailing business include:
Alternative Investments: The capital you invest in your business
could be used to start another type of business or invested in stocks,
bonds, or real estate. The returns you forgo from not investing
elsewhere are your opportunity costs.
Alternative Uses of Time: The time you spend building and
managing the ride-hailing business could have been spent pursuing
another career or project that might have provided immediate income
or different opportunities.
Alternative Markets: By focusing on a women-only ride-hailing
service, you are forgoing potential profits from targeting a broader
customer base (e.g., men, corporate rides, families).
Marketing Budget Allocation: Money spent on digital marketing
could have been used for app feature upgrades or partnership deals.
The return on investment from different allocations of your budget
should be considered.
4. Other Relevant Costs in the Ride-Hailing Business
Driver Incentives: The cost of providing bonuses, incentives, or
discounts to attract female drivers.
Opportunity Cost of Delayed Launch: If you delay the launch to
perfect the app or gather more market data, you may lose out on
potential revenue, especially if competitors capture the market first.
Switching Costs for Drivers/Customers: If your drivers or
customers are leaving other platforms like Careem or InDrive to join
your service, the incentives you offer (such as better commission rates
or safer rides) will be an explicit cost. The opportunity cost here is what
these drivers and customers leave behind in terms of earnings or
services on other platforms.
Understanding and managing these costs will help you make better financial decisions, optimize
resource allocation, and ensure long-term profitability.
Basic and total cost:-
Following are the cost estimate for launching the ride-hailing startup in Pakistan, with a total
investment under 1 crore PKR (10 million PKR):
1. Initial Costs Breakdown (Revised)
a. App Development and Maintenance
App Development (iOS & Android): PKR 2,000,000 (using local
developers or a small app development firm)
Server/Cloud Services (1 year on a basic plan): PKR 500,000
(using local or more affordable cloud services)
App Maintenance and Updates: PKR 500,000 (basic maintenance)
b. Office Setup
Office Rent (shared/co-working space): PKR 400,000/year
Utilities (internet, electricity): PKR 100,000/year
Office Equipment (basic setup with laptops and furniture): PKR
300,000 (one-time)
Insurance: PKR 100,000/year
c. Marketing and Advertising
Initial Marketing Campaign (focused on social media and
digital platforms): PKR 500,000
Driver Recruitment Incentives: PKR 300,000
Customer Acquisition Incentives: PKR 300,000
d. Salaries and Wages (for the first year)
Tech Team (2 developers): PKR 1,800,000/year (PKR 75,000/month
per person)
Operations Team (customer support and admin): PKR
1,200,000/year
Marketing and Sales Team (1 person): PKR 600,000/year
e. Licenses and Legal
Business Registration and Licensing: PKR 100,000
f. Miscellaneous Costs
Contingency (5% of total cost): PKR 500,000
2. Total Initial Investment (Revised)
Summing up all the revised costs:
Cost
Category
(PKR)
App Development & 3,000,00
Maintenance 0
Office Setup & Rent 900,000
1,100,00
Marketing and Advertising
0
3,600,00
Salaries and Wages
0
Licenses and Legal 100,000
Contingency 500,000
9,200,00
Total Initial Cost
0
3. Cost Classification
a. Current Assets
Cash and Bank Balance: PKR 1,000,000 (estimated as operational
cash)
Marketing Prepayments: PKR 500,000
Accounts Receivable: PKR 200,000 (for initial months)
b. Fixed Assets
Office Equipment: PKR 300,000
App Development (software): PKR 2,000,000 (the majority of app
development costs are fixed)
c. Variable Costs
Driver Incentives: PKR 300,000 (reduced incentives per driver,
focusing on part-time or freelance drivers)
Customer Discounts: PKR 300,000 (minimal promotions focusing on
digital marketing)
d. Fixed Costs
Office Rent: PKR 400,000/year
Salaries and Wages: PKR 3,600,000/year
App Maintenance: PKR 500,000/year
Marketing (recurring): PKR 500,000/year
4. Cost Behavior
Fixed Costs: PKR 4,500,000/year (rent, salaries, app maintenance)
Variable Costs: PKR 600,000 (incentives and promotions for drivers
and customers)
5. Break-even Analysis
Assumptions:
Average Revenue per Ride: PKR 200
Variable Cost per Ride: PKR 60
Fixed Costs (FC): PKR 4,500,000
Break-even Formula:
Break-even point (in rides)=Fixed Costs /
Revenue per ride−Variable Cost per ride
Break-even point=4500000/200-60
=4500000/140
=32143 rides
So, you need approximately 32,143 rides to break even in the first year.
6. Revenue Forecast (Year 1)
Target Rides: Let’s assume 50,000 rides in Year 1.
Revenue from Rides: PKR 200 x 50,000 = PKR 10,000,000
Variable Costs: PKR 60 x 50,000 = PKR 3,000,000
Total Costs (Fixed + Variable): PKR 4,500,000 + PKR 3,000,000 =
PKR 7,500,000
Projected Profit (Year 1):
Profit=Revenue−Total Costs=10,000,000−7,500,000=PKR2,500,000
Summary of Key Elements (Revised for 1 Crore):
Total Initial Investment: PKR 9,200,000
Fixed Costs (Annual): PKR 4,500,000
Variable Costs (Year 1): PKR 3,000,000
Break-even Point: 32,143 rides
Projected Profit (Year 1): PKR 2,500,000 if 50,000 rides are
achieved.
