Uber Increasing Prices with Higher Safe Rides Fee
Uber has been decreasing the cost of each trip by slashing fares in many cities. Before they started the year-long campaign to push prices lower, the average trip price (based on a 3 mile, 10 minute trip) in the US as of January 9th was $8.83. By September, the average price was down to $8.45. Uber claims that as they reduce price, drivers will get more requests, therefore increasing their earnings. However, this move seems to be in direct contrast to that reasoning.
Over the past month, Uber has been increasing the safety fee in about 30 cities a week. As of today, only 20 cities still have a safety fee of $1. This safety fee doesn’t include any local or city fees that must be collected on every UberX trip. They are added separately to the passenger’s bill. This differs from Lyft where the local fees are lumped into the safety fee.
Uber has on average increased the Safe Rides Fee by an average of 42 cents, to $1.42. Some markets are as low as 1.05, but some are as high as $2.50. As a result, the average trip has now risen up to $9.00 in just a month. In terms of net revenue, they increased it by about 5% but the increase to net income is much larger.
Here is what the Uber Safe Rides Fee pays for:
This fee supports background checks, building safety features in our app, incident response, and other operating costs for ridesharing in your city. Our continued investments in these areas help improve the safety, reliability, and sustainability of the Uber experience for everyone.
If they claim the Safe Rides Fee pays for those things, what about the 20% commission drivers give them on everything we earn from Uber? Shouldn’t the 20% go towards that? A lot of riders have been asking about what the commission pays for and what the Safe Ride Fee pays for.
Uber is projected to make an extra $210 million dollars a year by this safety fee increase of an average of 42 cents of the projected 520 million rides Uber is projected to complete this year. The projection was based on last years revenues ($2.91 billion) on 140 million rides in 2014 and the projected revenue for 2015 ($10.8 billion).
This small increase in price is going to make Uber a lot of money. Remember that Uber takes 20% and the Safe Rides fee, so their net income would be about $2 billion. The safe ride fee increase would add $200 million to that, or 10% of net revenue. They single-handedly increased net revenue by 10% and it is all coming from the passengers.
How does this affect the Drivers?
This doesn’t affect most drivers on the UberX platform, but will mostly affect drivers with their own commercial license. See below on why. For UberX drivers with their own personal insurance, the fees are charged directly to passengers. What you see after dropping off the passenger is the full fare charged to the passenger. Your actual take home pay is the full fare, minus the safe ride fee and any applicable tolls or local fees, and then the 20% commission. The increase in Safe Ride Fee won’t affect most drivers, but they may get some complaints from the passenger if they even notice the increased fee.
This fee increase affects passengers a lot more than drivers, and most passengers wouldn’t even notice, like all those fare cuts in the past 10 months.
Some Drivers are Profiting From This
Yes, you heard right. There are some drivers who will get a pay increase because the safe rides fee went up. Luckily, no driver is getting a pay cut from this. The safe rides fee is charged to every Uber passenger and those with their own commercial insurance gets to keep the fee, which are primarily the UberBlack and SUV drivers. There are some on the UberX/XL/Select/Plus platform with their own commercial insurance and these drivers get to keep the safe rides fee also, but the Uber commission is taken out of that too.
With the increase in the fee, there are some drivers who will earn a bit more. For a driver who drives 50 hours a week at an average of 2.5 trips an hour, that can equate to another $47 a week at an average safe rides fee increase of 42 cents, or over $2000 for the entire year. That can go a long way to pay for the expensive commercial insurance they carry.
Here are the cities with a Safe Rides fee over $2:
|Base Fare||Minute||Mile||Safety||Min Fare||Cancel|
These may be the places you want to consider getting commercial insurance if you do this full time. At $2 a ride, 100 trips a week, that is an extra $200 a week, or about $10k a year. That is enough to pay for commercial insurance for the year outright.
How do you feel about all the prices cuts to drivers and then to see prices for passengers going up due to the Safe Ride Fee?Have more questions about Uber or Lyft? Head on over to our Rideshare Driver Training Course! Driver Promotions