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How TaskRabbit Defied On-Demand Logic to Reach Breakeven

by | Mar 1, 2016 | BIA, Blog

TaskRabbit, the San Francisco-based household and office chores company, today revealed it will reach profitability this year. It also announced a 90-minute guaranteed job execution time for hour-long ad hoc projects, adding a timely result to its value proposition, which is key to local, on-demand success. People want things done now.

In an interview with Inc. Magazine, TaskRabbit CEO Leah Busque said the company will achieve profitability on a current revenue basis in 2016. A former IBM engineer, she focused on using cash conservatively to achieve unit-economic success. How, despite all the red ink flowing at major on-demand players, including Uber, Lyft and Thumbtack, did TaskRabbit manage to make a profit.

The short answer: TaskRabbit did not race to the bottom in a price war, focusing instead on being of help to its workers, known as “taskers,” in earning enough to be satisfied with the work. While taskers come and go, which is a natural feature of a contingent workforce, they don’t flee to competitors to get their next job at a lower rate. Now, handymen, delivery drivers, cleaners, shoppers, movers, party planners and, even researchers and web designers, enjoy the benefit of TaskRabbit marketing to drive their business volume.

The key seems to have come in 2013, when Busque introduced fixed-price listings for TaskRabbit projects. Although the move was not a big hit with workers at first, it did allow them to set a price for their hourly work. TaskRabbit has managed to keep taskers busy at an hourly rate each is comfortable with, because they set it. Consequently, TaskRabbit has also not created legal problems for itself by setting prices lower simply to win market share, raising the ire of the 1099 workers it depends upon for work and state labor regulators.

While many criticize the idea that on-demand workers are customers, TaskRabbit has succeeded in giving their taskers a service they will pay for in personal loyalty. Worker loyalty is often absent or very tenuous at other on-demand companies. Many on-demand companies face 60-percent or higher worker churn each year.

Fixed pricing is essential to the individual worker, who can use a higher price to differentiate their service based on quality and, in support of repeat customers, their increasing familiarity with customer expectations and preferences. In a fixed price market, consumers can select a low price knowing that it may come at a higher cost — fixed pricing allows the worker to make a statement about their promised quality. It supports a genuinely robust market where customer feedback reflects the quality delivered.

TaskRabbit emphasizes this higher quality commitment, featuring “TaskRabbit Elite” workers who are consistently ranked highly by customers.

Adding the 90-minute guarantee delivers a new dimension in demand generation for TaskRabbit. The company has allowed service buyers to schedule work ahead of time, but now allows short-turnaround jobs to be listed, responded to within five minutes and completed in 90 minutes. With the new service, called Instant Matching, a tasker can be deployed in response to ad hoc work opportunities, always at the rate they prefer.

So far, TaskRabbit’s more worker-centric approach seems to be the most winning strategy in local, on-demand.