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Given the strides they've made in automated dispatching and the increased demand for taxis that has come about as a response, I'm guessing the model makes sense at a higher price than they currently charge.

I was literally the model customer for taxis. No car, disposable income, goes out drinking a lot. Even so, I actively avoided taxis whenever I could before uber hopped on the scene. It wasn't a question of money - their dispatch services actively left money on the table with their terrible, terrible quality.

Whether Uber/Lyft took out too much money remains to be seen. But the dispatching technology is an immensely profitable business by itself.