Bengaluru: Urban Company expects its on-demand housekeeping service, InstaHelp, to take up to five years to break even as intense competition keeps prices well below sustainable levels.The service currently charges customers an average of Rs 138 per order. The company said this would eventually need to rise to around Rs 300 an hour to cover worker payouts and operating costs.“We’ve articulated that the average order value (AOV) has to get to around Rs 300 for this business to break even,” CEO and co-founder Abhiraj Singh Bhal said during the company’s post-earnings analyst call.“Will it take a couple of years or five years? We don’t know. We’re taking the worst-case assumption of five years, with a very gradual build-up to that point,” he said.Urban Company expects trained professionals on InstaHelp to earn Rs 130-160 an hour. At about Rs 150 an hour and 140-150 hours of work a month, they could earn Rs 20,000-22,000, Bhal said.Customer pricing would need to be higher because the company also bears the cost of training, customer support, technology and marketing.“If the category has to clear gross margin break-even at Rs 150 an hour, pricing has to be at least Rs 250 per hour. To fully break even, we need an additional cushion,” Bhal said.Prices remain low as Urban Company and rivals continue subsidising orders to attract customers. Bhal said the three main players currently serve neighbourhoods covering only 3.5-4 million households.“Most of the investment today is not expanding the total addressable market but artificially subsidising orders, largely from repeat users,” he said.Urban Company estimates the on-demand housekeeping market could reach Rs 7,000-12,000 crore annually across India’s top 15 cities and believes the battle for leadership will be decided over the next few quarters.“We want to be very aggressive right now. We think this market, like most home services, is winner-take-all. Trust compounds to the number one player,” Bhal said.InstaHelp completed 3.82 million orders in the June quarter, up 43% sequentially, while gross order value rose 32% to Rs 53 crore. Its loss per order narrowed to Rs 346 from Rs 447, though the business still posted an adjusted operating loss of Rs 132 crore.The losses pushed Urban Company to a consolidated net loss of Rs 92 crore for the quarter, compared with a profit of nearly Rs 7 crore a year earlier. Revenue from operations rose 44% to Rs 528 crore.Excluding InstaHelp, the rest of the business remained profitable on an adjusted basis, with adjusted operating profit more than doubling to Rs 67 crore. Its core India home-services business posted a profit of Rs 73 crore as gross transaction value rose 29% to Rs 1,056 crore.
