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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.