Why Are Ojeks More Expensive Than Taxis?

By Thibaud (Jakarta100bars)
Update 2016: This review has become completely irrelevant with the development of applications like GoJek, Grab and Uber! I keep it here though if you want to understand what was life like before those apps came:

I had an argument this morning with the ojek driver (moto taxis in Jakarta) who works outside of my residence.

I was planning to go to Pacific Place Mall, just one kilometer away. This normally takes about 5 minutes and with a taxi it costs less than 10,000rp.

The ojek's starting price was 30,000rp, which is crazy, and after much talking he gave me a last price of 20,000rp. I tried to bargain harder but I felt I didn't have the upper hand. I gave up and I took a taxi (for which I paid a sweet 8,000rp).

This experience made me wonder: How can a taxi be cheaper than an ojek? This is not the first time it happens. On average, I would say it is more expensive to go around with ojek or bajaj than by taxi in Jakarta.
At first glance, it seems that taxis should be more expensive: Their job requires more skills, they provide more comfort and safety to their customers and above all, they have more costs to bear.

A taxi driver usually gives back to his company more than half of his daily revenue. A Blue Bird driver told me that they must make a minimum of 500,000rp per day before they can start making money. Once they reach that target, they get 50% from any ride (another driver told me his minimum was 450,000rp and he received only a 30% cut). They must also deduct up to a third of their revenue to pay for gasoline.

In the end, a taxi driver may get a monthly salary of approximately 1,5M rp to 3M rp. That's only a small percentage of all the money he received from clients.
On the contrary, ojek drivers keep most of the money they make to themselves. Often, they are the owners of their motorbike (or they will be if they took a credit). They pay their gasoline too but it is much cheaper. To make 3M rp per month, an ojek driver only needs to do a few rides per day.

So why are ojeks more expensive?

The reason is that the bargaining power of ojek drivers is stronger.

Ojek driver can make their prices fluctuate according to the time of the day. During peak time, they can be strong with the pricing because they know they will get another customer soon. Taxi drivers cannot do that; they just take whoever stops them (except the taxis that don't put their meters on). This logic tends to make them wait for a big fish instead of taking small jobs.

The price given by an ojek driver can also change according to who is requesting a ride. They will not give the same price to an expatriate, to a maid, or to an executive working on Sudirman. Since I am a bule, I am not surprised I got a high price.

People who need ojeks are usually in a rush: They must go somewhere fast and they need to beat the traffic. They don't have much time to negotiate or to find cheaper alternative. They will tend to agree on any price, even if it is unreasonable.

Ojek drivers are also located in strategic areas: They do not compete directly with taxis but complement them. You will find them waiting for you where there are no taxis available. They have to wait longer for a client, but to compensate they charge him more.

At last, you would think that it is very easy for an ojek to go wherever he wants and to wait for a client. This is rarely true: A newcomer will probably be rejected as he is bringing more competition. This self-regulation of the ojek's industry certainly limits the options for the client, and therefore the price war.
Ojek drivers get more money than taxi drivers, and they work less. I guess the new question that would need to be answer is why taxi drivers don't change job and become ojek?

I asked this to a few of them, and their answer was that their status as a taxi driver was more prestigious. They are clean, they wear a uniform, they can stay inside their car and they belong to a corporation. All of this makes it worth having a lighter paycheck at the end of the month.

3 comments to '' Why Are Ojeks More Expensive Than Taxis? "

  1. kalau taxi lebih lama sampainya karna macet kalau ojek kan bisa nyelip heheh

  2. Also not to hot being an ojeck driver in the rainy season

  3. Thanks for explaining this to other foreigners. This is a basic common sense for Indonesians, but somehow a curiosity for new arrivals. I asked the same logic to my ojek drivers. While my local colleagues were amused that I even asked.

    Indonesia and especially Jakarta is a free market experiment to the extreme, complimented by their feudalistic cultural order. Thus, explains the non-existent public amenities - not even sidewalk. While on the other hand, I could not see the benefit for the Indonesians of having a market economy either.

    Anyway, one still have to respect the locals, it is their country in the end. It's like eating sh*t as a local delicacy. I would not have it because well, it's sh*t. But if the locals love it so much, who am I to judge.

    It is difficult to ignore the absurdities and the miseries (unless you lock yourself-in your serviced apartment all the time bar going to work and monthly escape to Singapore/Bali/Bangkok/KL), but you will learn.

    You'll get use to it.