Come one come all

Uber just cut prices in 48 markets

This hasn’t happened in awhile. Uber just slashed its cost in 48 of its U.S. markets. The last time it started giving such big discounts was half a year ago, at the start of summer.

The discounts will apply to the newer cities that didn’t seen the boon of the first round of cuts (sorry, San Francisco – you’re already a beneficiary). Miami, Tucson, Baltimore, Dallas and many other places are the new recipients. The percentage of the price cut varies depending on market.

This time, Uber is so confident that the cuts will result in more rides taken, and therefore more money for drivers, that it’s guaranteeing driver earnings.

Here’s how: It analyzed company data to determine average driver earnings in each city during slow, normal and busy times of the day (pre–price cuts). That number varies across the country, as you might imagine. If a driver makes its app available, accepts at least one trip, and has an acceptance rate of 90 percent while its app is on, then Uber says it will automatically give the driver the average hourly rate in wages if they don’t automatically earn it.

It’s telling its drivers in each market what that fare is, so the drivers themselves can track whether Uber is carrying through on its promise.

The reason Uber feels comfortable taking that financial risk is because it has the data from its more mature markets to support its theory. It cut prices in other cities over summer and never had to return them to pre-cut levels, because the number of rides people took increased. “This is really a move to replicate the success we’ve seen in other markets,” Andrew Macdonald, Uber’s regional manager for central parts of the U.S. and Canada, told me.

He explained that although cities may have cultural and transportation infrastructure differences, Uber still believes it can make more money and drive usage by lowering fares in all types of locations, from more rural to urban. “What you see as a city develops is that as Uber expands its presence and the system becomes more efficient, people rely on the system more,” Macdonald said. “People start to ditch their cars. That’s a common thread you see across markets.”

In its blog post announcing the changes, Uber pointed to Chicago as one such example. Drivers’ average hourly wages increased from $19.10 an hour to $21.34 an hour from December 2013 to December 2014, despite the fact that the company rolled out permanent price cuts for passengers during that time.

According to Uber, price cuts in Chicago led to increased driver earnings per hour
According to Uber, price cuts in Chicago led to increased driver earnings per hour.

19 Responses to “Uber just cut prices in 48 markets”

  1. In Charlotte, Uber cut the rates to $0.75 per mile from $1.25. Their guarantee is $22 per hour in prime time but they still take 20%; $22 becomes $17.60. Some of my calls are up to 20 minutes away. I don’t get paid to travel to a customer. If I don’t accept that call, I can’t hit 90% until 9 more calls come in. Since I pay $10 a week for the IPhone, I will drive enough to cover that fee then park my car. I will not accept calls over 10 minutes away. The only way drivers can increase their earnings is if the customers can’t get rides and complain to Uber

  2. Fotaugrafee

    Something else that is overlooked entirely in this article, with little regard to ONE thing.

    Expenses. It costs Uber almost NOTHING to have us on the road. All expenses, 100% of them, are the driver’s responsibility.

    So “more rides per hour” at LOWER RATES = greater expense (wear & tear, fuel, etc.) = more expense to the driver. So while y’all can look at one picture, most of us realize this is just another carrot being dangled in the face of drivers. I had no need whatsoever for “more rides per hour”, my living was quite comfortable.

    What they needed to do was attempt to get more EXISTING drivers on the road during busy times. Not hire additional drivers. Not drop prices. People seemed content with paying $1.70 per mile in Austin, a rate that is FAR LOWER than that of Yellow Cab – with cleaner vehicles & better, more on-demand service.

  3. Fotaugrafee

    The problem is…

    We DID suffer a first round of cuts, only 2 months ago! In Austin, which Uber introduced itself into around March 2014, they came in at $1.90 per mile (and ? per minute?). On November 6, they slashed rates 10% for whatever reason to $1.70 per mile and $.30 per minute. Presumption is this was a response to the negative publicity surrounding the $350-500 fares during Halloween & the threat of Lyft reaping some of their business.

    Yesterday, they again cut rates 25% — $1.30 per mile, $.19 per minute (of which the driver sees about $1.04 and $.15 respectively). This is unlivable in expensive Austin. Seems like they getting desperate to compete with Lyft here, especially after a small fraction of riders abandoned the service due to heavy-handed surge pricing. And they still have the nerve to tell customers that “the tip is included in the fare”. REALLY?

    Austin is right now the fastest growing city in the US, and one of the most sought after places to live. We have international & domestic visitors on a regular basis for a city of 875,000. They’ve been hiring former Yellow Cab drivers like they can’t find anyone else, and that in itself is quite disturbing.

    Right now, it’s just a sucker game for whichever drivers opt to stay, aside of those who need it to make a living until something better comes along (since this was dropped in driver’s laps with less than 24 hours notice). Yellow Cab’s business in Austin is reportedly down 60% since introduction of ride sharing here, so the taxi companies are far from a threat. The idea of stealing away ALL of their patrons is unattainable, and the competition is necessary, but cutting drivers throats is not.

  4. It’s all nice and dandy, IF you do not look at the details!
    Sure, the amount of the rides will increase, sure the drivers MIGHT increase their hourly rate, however, no one is talking about the so many extra miles that the driver will have to put on his/her vehicle to make that hourly rate and even than no one is calculating the expenses that driver will have to make. The hourly expense will increase more than the hourly income will.
    This whole system is only good for the company(ies) as well as the passengers, but the drivers, basically the backbone of the whole system is being treated as a push over.
    I am reaching to potential future drivers; if you have another option go with that, not with Uber or any other ride sharing company. Sooner or later you will sit down and ask yourself the question; why my credit card bill is not getting any lower???

  5. This is dissappointing to see. If Uber really had any concern for their drivers welfare in all this they could simply slash the commission they take from each fare. That would easily offset the lower rates and put the drivers minds at ease.

    This “guarantee” is only a gimmick that will never be instituted permanently. All this will do is usher in a low class breed of driver willing to work at (in some markets) well below minimum wage.

    History will repeat itself as they are basically begging to be regulated now.

  6. gordovon

    We the drivers can not quit
    We cant give up
    We started this crab; now we got continuing supporting travis and the pseudo passengers scum, now
    Whats going to happen with them?accostumed to pay nanopeanuts for taxi we can not let them down
    This poor disgusted pseudo passengers are not willing to ride anymore on the stinky taxis
    Also with this new rates homeless and walfare recipients would be able to have a decent transpirtation
    Travis will be very proud of us for help him to depreciate the taxi industry now “new rates” by a 80% and make believe all this cheap, frugal, arrogant, cinics, disgusted, shameless, classless passengers that we are a bounch of mental retarders doing this just for fun or the pleasure to meet such scum
    Keep doing like that ill like to see how you end up in the next comming days dealing with the stress and the pressure of know that some scum people is rating you despite the nanopeanuts they are paying you comparing with the disgusted stinky cabs
    So please delete that stupid idea of quit from your head
    Travis at this point is very pleased
    And dont forget; he loves you

  7. They advertise making $35-40 an hour to recruit drivers, so why is the guarantee $12 – 20? They also don’t mention that those guarantee rates are before Uber’s 20% cut! You want to put 200+ miles a day on your car for $9 an hour? Be my guest.

  8. Tyler Riggs

    Until Uber allows tipping in app like Lyft does, I recommend choosing Lyft (or at the very least, tip your Uber driver, because despite Uber’s claims, a tip is not included.)

  9. Joseph Iley

    when you cut the cost to customers it doesn’t help drivers. It actually hurts drivers because their operating cost go up. An example would be….. if it cost $1.70 a mile to ride in an Uber car before and Uber cuts the cost to $1.50 a mile; that means the driver will have to 14% more to make the same amount of money. The only person who wins here is Uber and the passengers. Uber wins because their operating cost isn’t going up. Passengers win because they pay less. But drivers loose because they have to spend more money on gas to run those calls. Even if they do more calls each day, they still have to dead head to those calls and that is fuel cost going up. Now how about Uber slashing prices and also slashing their commission take. Then it might be fare. A good example there would be for Uber to slash fare prices by 20% at the same time slash Uber slash their commission rate from 20% to 12%; giving their drivers 88% of the fare; then it might be a fair deal for passengers and drivers.

    • Uber understands that they too are taking a hit in revenue because they take a % of the ride total. The are willing to make less on every ride because the total from all rides will go up. This means more total money for the drivers pockets even if the margin is less. The rise in demand will make up for the lost margin and if not Uber will pay you the difference. Best of all…if individual drivers such as yourself do not like it, you can always go find another source of income.

      • The difference is that Uber’s marginal cost is nearly zero; it doesn’t cost Uber materially more money to assign more rides. The driver’s incremental cost is material; as she gives more rides, her costs go up commensurately. So Uber stands to make more overall with no added cost while drivers will make more but also have more cost. Guaranteeing you $20 an hour when you used to make $18 and your cost went from $5 an hour to $10 an hour isn’t a positive step for drivers. A solution would be for Uber’s take to be on net, not gross. If Uber took 25% of net fare after an average per-mile (use the government rate to make it easy) for the dead-head and the ride was taken into account, Uber would be incentivized to create a pricing model that helped them AND drivers.

      • Disagree, because you cannot add more time in the day/night i will have the same amount of rides and if i have the same amount of rides at a cheaper rate…. Than i will in turn be making less money, you are not going to get more rides because they cut the fair, that makes no sense!!

        • You actually will because your vehicle is not moving non stop as soon as you go online… (i know mine isnt) so they mean less lag time in between calls but….what they need is for someone to sit there and have a Q and A with them live on tv and expect them to give you a reason why more calls with lower rates will be more profit….thats where they will choke because its mathematically impossible for what they are proposing to benefit us. Now they throw out a few quotes to modivate drivers….not realizing some drivers have book smarts and can add and subtract to figure out the bs we get fed. But hey i give them props, they are true businessmen that grew this big in such little time…i cant hate on a person with that much success in such short time…now only to figure out a way to help the drivers grow with them….c’mon uber

      • Fotaugrafee

        And how long do you think this guarantee will last? I give it until February 28 at the very latest, then we’ll have to struggle along on the $1.04 per mile and $.15 per minute. That’s chicken shit, not worth the wear & tear on my PERSONAL vehicle, will have to look for another job.

        Cutting driver’s throats overnight, with less than 24 hours notice is pure garbage. A sign that this was NOT in the best interest of the drivers, not that Uber give a damn about such things.

    • maxrebos

      Ahem!! Why doesn’t uber take a cut in their fees? How can a driver make more money when fares are cut??? The driver has the same expenses. Now they have to make more rides to make up the loss. More gas, more time, more auto expenses. Makes no sense. Show me the money!!! If uber promoted tipping drivers of uberx then it would make a little sense.

  10. voiceofreason

    This data is deceptive because it doesn’t state that drivers are making more because they are working for multiple platforms all at the same time. Many drivers only accept Uber calls during surge pricing which drastically increases your per hour numbers. If they were to throw out these drivers and only analyse drivers who work exclusively for tUber I’m sure the numbers would tell a much different story. Additionally, lower fares means more miles which means more cost and wear and tear is incurred by the driver. Where do these numbers factor in?

  11. (*edit*)
    I drive a couple nights a week for Uber. So far we have not received any guarantees about base pay, just the notification that the per-mile rate was cut. I think the hourly wage information above is misleading; this is at-will employment and the people who rely on this as their sole income will likely see their wages decrease. Also, hourly rates are determined by the time it takes to complete the transaction from ping-accept to client drop-off and rating; so the time in-between rides is not factored in.
    At the moment Uber has not changed any other fees like the base rate, the safety fee, airport fee, Uber’s 20-28% cut etc… meaning that this rate decrease specifically affects the drivers more directly than the company. While the demand for rides will increase, the per-mile and per-ride cost for the drivers will remain the same (wear and tear on the car, time spent waiting for clients, etc…).
    Uber is confident that it will make more money, not that it’s drivers actually will take home more. Safe to say, the ~25% per-mile and minute fare cut means I won’t be driving for these guys any longer… Hope all the Uber exec’s enjoyed their bonuses.