Saturday, January 9

What Uber Rate Cuts Mean for this Uber Driver

I woke up to a surprise this morning.  More accurately, after working a 21 hour shift yesterday, I groggily noticed a surprise as I was laying down at 4:10 this morning:  Uber announced a new round of rate cuts.  Thank you, Uber.  I am now confident that yesterday was the last 21 hour day I will ever work.

In Tampa Bay, rates have been cut approximately 30%:






Uber's New Rate Schedule for Tampa

Base Fee:  $1
Per Mile:  $.65
Per Minute:  $.11

Here's what veteran drivers receive after Uber takes its 20% commission:

Base Fee:  $.80
Per Mile: $.52
Per Minute:  $.088 ($5.28/hour)

Here's what new drivers receive after Uber takes its 25% commission:

Base Fee:  $.75
Per Mile:  $.4875
Per Minute $.0825 ($4.95/hour)

A couple notes about these fees.  First, drivers are only paid when a passenger is in the car.  Time and mileage between rides or en route to a ride request is NOT paid.  Second, these are the GROSS Rates drivers receive, before vehicle expenses.  From these rates drivers must deduct fuel, depreciation, repairs/maintenance, insurance, cleaning supplies, self-employment taxes, income taxes, etc.

The new rates represent a 75% discount to what taxis charge in Tampa Bay.  A 75% discount for a superior product.

I can no longer earn money driving for Uber.  Prices must be surging 1.5 times just to equal the old rates, which no one would argue were already very low.  Most people would favor Uber even if Uber's rates were comparable to taxis, since the service is so much better than taxis besides the cost of the ride.  For now, I will focus on driving for Lyft until they decide to match Uber's rates.  Uber is offering driver's guarantees temporarily, but even those are very low.  For example, during non-peak periods, the guarantee is $10/hour before Uber's commission; after the commission it is $8/hour for veteran drivers and $7.50/hour for new drivers.  This is the GROSS amount, before drivers take out expenses.

Knowing this, how can a customer order an Uber with a clear conscience?  Aren't they preying on the ignorant driver who isn't smart enough to realize how much money he is losing?  Is it ethical to take advantage of another person's ignorance?

6 comments:

  1. I have to say I don't understand Uber's logic. All of the superior drivers like yourself will leave and then what are they left with??

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    1. Thanks, Melissa. I have a 4.89/5.00 rating. Top partners (top 10%) average 4.85. Point is, I do care about what I do. I clean my car daily, follow traffic laws, make intelligent conversation, and am an agreeable person. But I won't come out of pocket to drive. Who would?

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  2. It's very simple. Uber offers very low rates to the customer, thus forcing taxi drivers out of business. Once a good many of taxi drivers are out of business, Uber raises their rates and the consumer is stuck. Not much choices left for the consumer anymore, so they are now forced to pay Uber's higher rates.
    It's called capitalism. Uber wins. Corporations win, and as always, the people lose.

    Good luck!
    I don't use either. I find a self-employed, retired person and hire them exclusively.

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    1. What's flawed with your thesis is that Uber was already less than half the cost of a taxi. I don't think lowering rates even more creates that much more demand for Uber. Either someone needs a ride or not. Why would someone who chooses a taxi over a half-priced option suddenly choose Uber because the discount is now 75%?

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  3. They lowered rates here in Kansas City. Our rates are higher than yours though and the guarantees are higher too The rate reduction is supposed to be temporary so hopefully the rates will go back to normal soon.

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    1. Andy, from what I've been reading, Uber has raised rates in each of the past 3 January's. Each time they claim it is only temporary but the rates only go lower, not higher. I really hope they do go back up; I can't drive for them at these rates. I just don't believe lowering rates will boost demand, which is what Uber claims. Either you need a ride or you don't. Most riders have no idea the rates have been lowered, anyway.

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