On-demand or pre-booked taxis: which model suits a new ride service?

If you're planning a new ride service, the first big choice isn't the app. It's whether you promise a car now or a car at the time the passenger asked for, which is the real question behind on-demand vs pre-booked taxi work. This guide sets out what UK law says about each, how many drivers each one needs, how the pricing differs, and which suits a small town.

What is the difference between on-demand and pre-booked rides?

On-demand means the passenger asks for a car to come as soon as possible. Pre-booked means the passenger books a car for a set time, whether that's in half an hour or next month.

The law draws its line somewhere else. The Department for Transport's statistics describe it plainly: taxis (hackney carriages) can be hailed in the street, picked up at a rank or pre-booked, while private hire vehicles must be pre-booked, can't use taxi ranks, and commit an offence if they ply for hire.

So a passenger tapping "book now" in an app is still making a booking. In Reading Borough Council v Ali (2019), the High Court found that a driver taking jobs through the Uber app wasn't plying for hire, because the customer couldn't use the car without booking it through the app first. The Divisional Court followed that decision in December 2021 in a case about Free Now in London.

For a private hire firm, then, on-demand is a promise about speed. It isn't a different kind of licence.

Both models carry the same paperwork. Outside London, section 56 of the Local Government (Miscellaneous Provisions) Act 1976 says the operator must record the particulars of every booking before the journey starts, in the form the council sets. The DfT's Statutory Taxi and Private Hire Vehicle Standards ask councils to require the passenger's name, the time of the request, the pickup and destination, the driver and vehicle, and the staff member who took and dispatched the booking, and suggest keeping the records for at least 6 months. An on-demand app has to write that record in the seconds between the tap and the dispatch. Our guide to keeping private hire booking records has the detail.

Can a private hire firm offer on-demand rides?

Yes, as long as every ride goes through the licensed operator before a car is sent. A private hire car can't be flagged down, can't wait on a rank and can't tout for passengers, however fast your app is.

The DfT's best practice guidance for councils says private hire vehicles aren't legally available for immediate hiring in the way taxis are. The passenger has to go through an operator, and the operator takes the pickup and drop-off details first.

London adds two points that bite harder on an app-only service:

• You contract as principal. Regulation 9(14) of TfL's operator regulations, made after the December 2021 judgment, requires a London operator to contract with the passenger as principal to provide the journey.
• Someone must be reachable. TfL's voice contact requirement means you make a person available for passengers to speak to during your operating hours and while a journey is under way. TfL asks how you'll do that at night and at weekends, when your office may be shut.

Hackney carriages can do both kinds of work. A taxi can work the rank and the street, and the DfT's guidance notes that licensed taxi drivers can carry pre-booked fares anywhere in England and Wales. If you're deciding which licence to build on, read hackney carriage and private hire licensing compared.

How many drivers does each model need?

On-demand needs more cars on the road than the work in front of you, because a car has to be free before the request arrives. Pre-booked needs enough drivers for the jobs you've already taken, plus some slack for late bookings.

Example, with made-up numbers to show the shape of it. Say you promise a car within 10 minutes anywhere in town from 6am to 2am. On a quiet Tuesday afternoon you get two requests an hour. You still need a free car within 10 minutes' drive of every pickup when each request lands, and in a spread-out town that can mean two or three cars waiting at once and earning nothing.

Somebody pays for that waiting. In Uber BV v Aslam [2021] UKSC 5, the Supreme Court upheld findings that Uber drivers were workers, and that the tribunal was entitled to count as working time any period when a driver was logged into the app, in the area they were licensed for, and ready and willing to accept trips. If your drivers are workers, waiting time like that can count towards rights such as the minimum wage. Take advice on self-employed or employed drivers before you design a service around drivers sitting and waiting.

Big on-demand platforms use price to pull drivers out when they're short. The Competition and Markets Authority's 2025 work on dynamic pricing noted that in ride hailing, higher fares at busy times may encourage more drivers onto the road.

Pre-booked work turns driver supply into a planning job. You see tomorrow's jobs tonight. You can ring a driver about the 5am airport run, turn down a job you can't cover, and fill the gaps in the rota a day ahead. Recruiting is easier when you can show a driver a real list of work rather than a promise of demand: see recruiting drivers for a new ride app.

How does pricing work in each model?

On-demand apps tend to price by demand. Pre-booked firms quote a fixed price when the job is booked.

Uber's own guide for drivers says surge pricing starts when there aren't enough cars for the number of trip requests, for example in bad weather, at rush hour or around big events. Riders are told in the app when rates rise, and drivers see a surge amount or an upfront price that includes it. Surge can apply in one neighbourhood and not the next, and prices update with demand in real time.

A pre-booked firm quotes from a price list, a mileage rate or fixed zone prices, and the passenger knows the fare before the car turns up. In London that's a licence condition: TfL's operator handbook says you must agree a fare for the journey or give an accurate estimate, and record it.

Hackney carriages follow the council's rules. Most councils set maximum taxi fares, there's no council power to set private hire fares, and a hackney carriage on a pre-booked job inside its own district can't charge more than the fare on its meter (section 67 of the 1976 Act). Whatever model you choose, the passenger has to see the full price before they commit. Our guide to surge pricing and the law covers the consumer rules.

How do the two models compare side by side?

Which model suits a small town?

In a small town, pre-booked work is the better place to start. Demand is thin for most of the day, and the rank already serves people who want a car this minute.

The DfT's 2026 statistics show the pattern. Licensed taxis per 1,000 people are broadly the same everywhere, between 0.7 and 1.0, whether an area is urban or mostly rural. Licensed private hire vehicles per head are three to five times higher in urban authorities than in more rural ones. The DfT warns that these counts show where cars are licensed, not where they work, because drivers can license in one area and work in another, so treat them as a rough guide.

A small fleet can't keep a free car near every street at 3am. What it can do is cover the jobs people plan: the early train, the hospital appointment, the airport run, the trip home from a restaurant booked weeks ago.

At night a pre-booked promise you keep beats an on-demand promise you break. A passenger told "no cars available" at 1am has every reason to try someone else next time.

Plenty of firms take both kinds of job on the phone anyway. A caller asks for a car as soon as possible, and you give them a real pickup time based on which driver comes free next. The difference from an app is what you promise: quote a time you can meet, and say so when you can't. There's more on local demand in launching a ride service in a UK town.

What technology does each model need?

An on-demand service needs live positions for every free car, a way to match a request to a nearby driver within seconds, a passenger app that shows the car coming, card payment, and a booking record written before dispatch. Building that is a big project, and the cost of building an app like Uber goes through the parts.

A pre-booked service needs less. You need the booking channels your customers already use (phone, WhatsApp, text, email and your website), a system that holds the record your council asks for, a way to give each job to a driver, and a confirmation to the passenger.

Dispatch AI is booking and dispatch software for taxi and private hire firms, and it takes pre-booked jobs. It answers your phone, WhatsApp, texts and emails, books each job at your fixed zone prices and sends it to your drivers on your own app.