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Uber, Lyft and Sidecar – Outlook of Rideshare in 2015

Uber, Lyft and Sidecar – Outlook of Rideshare in 2015

So these Uber price cuts two weeks ago were supposed to be temporary. I’m not quite sure if these price cut will be temporary. The last time this happened, it was permanent but small part of me really wants to believe it is temporary. It gets into my first prediction about 2015.

Prices will start going up by the end of 2015

Prices have been sliding slowly over the past 18 months in every market. Most of the price cuts were adjustments from the initial new city pricing levels to a more mature market pricing. Now after the price cut in 48 cities two weeks ago, these fares are barely profitable for many drivers. Luckily for now, there are hourly guarantees to help maintain income but I don’t see how many drivers will continue driving at the low price levels in some of these cities without the guarantee. Many of these drivers are staying very busy and still only netting $10 an hour. This is before Uber’s 20% fee and then taxes and cost of gas. Many emails claim the guarantee was last as long as the price cut exists but they could always change this at any time or if they decide to make the price cuts permanent.

I don’t see prices increasing in the next three months but by the end of 2015. I hope that these price cuts in 48 cities are temporary and revert back to their “normal” levels. By the end of the year, I see prices creeping up. Uber wants to make more money and they can do that by raising prices or commissions. Raising commission is a very risky thing for Uber as they will risk losing many more drivers and be forced to offer more signup bonuses to make up for the loss of drivers, which is probably more expensive than any increase of commissions to Uber.

Uber’s Grand Pricing Experiment

Uber is using these price cuts to increase demand but also experiment with finding the correct pricing. This is something that Uber has not done a lot of. They usually set a price and then collect data and reduce it as necessary. This only means one or two iterations at best to get to the correct pricing. This additional price cut will let them know what happens if they decrease it to an unsustainable level and how it impacts driver’s perception and also driver income. Remember that Uber’s 20% cut is based on the fare so when prices go down, their profit goes down a little bit as well.

This is the primary reason why I think prices will go up towards the end of 2015.

Lyft needs to do something big in 2015

I’m not talking about generous driver signup bonuses or passenger referral program. They need to do something big to stand out in the highly competitive rideshare market. They need to focus on branding and what sets them apart from Uber. Yes, Lyft is pink. But what else are they known for? As of late, the mentoring program isn’t nearly as effective in keeping bad drivers off the platform so what else can Lyft do to set them apart?

Lyft emailed their drivers last night hinting at a big surprise coming. I hope it wasn’t the fare cuts they made this morning.


It could be an update to the car stache as posted on Wired.com. It is a glowing mini-stache, which is pretty cool.

Their Lyft Line is a very promising feature. The passenger only has one minute to come out to the car, which can significantly boost income for the driver because of less downtime and make rides a lot cheaper for everyone. This could be their defining feature. Uber has their own Uberpool feature as well.

Insurance will continue to be a hot issue

The whole insurance issue blown up in the fourth quarter last year after a few drivers got into major accidents, in addition to a few serious ones from late 2013 and early 2014. We covered the potential insurance grey area for both the driver and the cars for a while now and eventually it hit mainstream news channels like CNN and Forbes.

A big change I see coming in 2015 is more and more insurance companies covering rideshare drivers. Don’t expect your insurance to stay the same price but will go up in order to cover any additional risk with driving on rideshare. Many drivers are willing to pay a bit more in order to be fully protected by their insurance. What’s the point of insurance if they don’t insure you? This whole insurance issue has caused quite a few drivers to go look for commercial insurance, which is very expensive, especially after all of these price cuts by both Uber and Lyft.

Sidecar will be much more popular in 2015

The grassroots strategy to increase Sidecar ridership has been working very well in the past two months. A $100 Sidecar signup bonus for drivers and subsidized cheap rides have done well to increase supply and demand. I would expect them to double their ridership from November by the end of the first quarter and possibly double that again in 2015. There are more and more drivers signing up for Sidecar everyday and demand has been going up as well. Their big push is Shared Rides and I think they can continue the momentum with this feature into 2015. They have release a few promotions to really get a lot of new passengers to try Shared Rides while subsidizing the discounts to driver to maintain driver income.

The set your own price feature is also very good. They have pulled back on the feature to limit you to change your multiplier only on peak times but for drivers who only occassionally drive on Sidecar, this is good way to ensure you’re getting paid well for your time driving, even if you don’t get nearly as many rides. I personally would love less rides but the same amount of money. This is part of the allure of UberBlack.

Passenger Referrals becoming a key part of driver earnings

Still not enough people are handing out referral cards. Everyone complain about low fares, but referral cards can be an effective way to boost your income.

Here is my video going over the two different ways of doing passenger referrals:

Not enough people are doing this. Granted that Lyft nixed the programs in many cities but there are still Uber referral cards you can hand out. It only pays $5 but it could pad your income by $50-$100 a week if you keep at it. The top Lyft referrers have over 1000 referrals last year alone. They claim on average they can clear $30 an hour by handing out referral cards, and there is no commission on that payout. This was back when referral cards were free from Lyft but even if you had to pay for the cards, it comes down to maybe $20 an hour.

So what are your thoughts about Uber, Lyft and Sidecar in 2015? I mean it can’t get much worst before it gets better right?

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