How Uber’s Low Fares are Affecting Passengers
There have been many articles that cover how the lower fares are decreasing the income for drivers. Lower fares also mean a cheaper ride for passengers, but is that always a good thing? Does lower fares really mean cheaper fares? Not all the time, especially due to surge pricing.
So how does lower fares affect passengers? Well, as we’re all effectively being paid less, drivers are now much more critical about which passengers to pick up. Remember in our TOS that we are allowed to carry out the job anyway we see fit. Many drivers have been temporarily suspended for refusing too many trips or kicked offline for 5 minutes if we reject too many requests in a short period of time (usually 3-6 in a row). This point is elaborated in the list below.
Here are a few ways passengers are seeing the effects of low wages:
- Many of the best and veteran drivers don’t drive anymore or much less than they used to: Do you notice a reduction in quality of service? Its mainly because the best drivers have reduced their hours or found something else to do. In a recent study by Sherpa, 70% of their users were part time so it is not surprising that many either quit or drive much less.
- Drivers don’t feel like providing top service for low wages: Let me ask you this. What would happen if you were forced to tip a waiter before the service was provided? What would happen if you only tipped 5% instead of customary 15-20%? This is exactly what happens to some Uber Drivers. They feel they don’t get paid enough to provide top level service and only provides the basic service to keep their rating at a minimum level.
- Low wages shrink the talent pool: When UberX first came out two years ago, many drivers were making much more money on a regular basis, so better drivers were on the platform that essentially built up the initial customer base and high user expectation of service and quality. With the rate cuts and lower wages, you see seasoned and highly rated drivers quitting and also less of them are applying. Overall this leads to lower quality of service.
- NOTE: There are still some amazing and die-hard drivers on Uber, Lyft and Sidecar that day in and day out do a great job. They go the extra mile for their customers and promote the respective brands. I am merely noting that there are just less of them around.
- Low wages don’t pay for newer or nicer cars: When the service was paying well, there were drivers in many markets that often had nicer and/or newer cars. Now many drivers have economical cars so that they can earn a bit more than driving an expensive car (if they had one). Some drivers with nicer cars decided its just not worth it to drive considering the car they had. Uber was forced to lower their car requirement down to year 2000 in the markets they legally could to get more drivers. So what used to be a 2004 car is now 2000 driving you around.
- Some passengers may have a harder time getting a ride: Yes, Uber has been hiring like crazy. but here are two situations where an Uber users may have a hard time getting a ride:
- Low passenger rating – Uber drivers can rate their passengers. Many passengers are oblivious to this fact. If you have a low rating, chances are that some drivers may not want to pick you up because of the predicted hassle of a low rated passenger and again, drivers don’t feel like they are paid enough to deal with a low rating passenger. [Note, I don’t look at ratings, but all of my low rated passengers were great, and some of the worst passengers had been highly rated (4.7-4.8 range).]
- Long ETAs – If your pickup spot more than 10 minutes from a driver, a driver may not accept the request because its just too far for them to go to pick someone up. We don’t get paid to drive to pick someone up so long ETAs can negatively affect our income, especially for short rides. Also, many drivers are aware that passengers are very critical of their time so on long ETAs, it is very likely that the passenger will cancel on them so some drivers avoid the situation all together by not accepting the trip.
- Less amenities: remember when you can find a bottle of water and snacks and candy in almost every car last year? Well those days are gone. Fewer and fewer drivers can afford to provide free bottles of water and food to all of their passengers. There are still some drivers who still does this but they are becoming fewer and fewer. Many drivers have found that having that doesn’t affect their rating much. When I first started, I provided water but eventually stopped doing that unless it was a really hot day outside.
- Fewer Cars – in some extreme cases of fare cuts, this has directly led to having less drivers on the road. Either they quit Uber altogether or have started to drive on Lyft. The effect is less cars and higher demand, which leads into my next point:
- More Surge Pricing – Passengers may see more surge pricing because of the higher demand during key times of the week. If you factor in the price cut, sometimes it is cost neutral for the passenger. A fare before the 15% price cut is the same price as 1.2x surge, but in my experience, lower fares usually lead to higher surges and/or surge pricing happening more often.
So at the end of the day, lower fares doesn’t necessarily better for customers. The crazy thing about all this is that usually passengers don’t notice the lower fares. The first time they cut fares in Boston, many passengers weren’t even aware of it. For passengers who knew about the price cut, they don’t even know how much they would save unless they take it on a daily basis.
So have you noticed these trends as a driver or as a passenger? Make sure to tell us about it in the comments below!
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