Uber Cuts Driver Trip Rates in Two Biggest US Cities
Uber is always tweaking how much drivers earn per mile and minute. When Uber changes the per-mile and per-minute rates, it only affects driver earnings. Passengers pay a completely difference price due to upfront pricing. It is unclear if passenger fare rates will be affected with this change but driver earnings will change.
Uber Seasonal Price Adjustments
In the past, Uber has adjusted prices twice a year. They typically cut them in January-March and then increase them in the fall. However, Uber has only been making small adjustments throughout the year. The last time Uber has seasonally changed prices in many major markets was back in 2016. You can read more about this pattern in the below post:
- Uber Cuts Fares in New York and 26 Cities in Jan 2016
- Fare Cuts in 8 Cities in February, March 2016
- Fare Cuts in 4 Cities in May and June 2016
Uber Cut Driver Trip Rates in Two Biggest US Cities
Yesterday, Uber cut rates in New York City and Los Angeles. New Jersey and Orange county driver earnings were also affected as well and each location was changed with a different rate.
Uber’s explanation for these price changes is that drivers will be better compensated for trips that encounter a lot of traffic and my calculations show that. I have a few test cases and all of them show an increase in earnings. Below is the table:
One thing to note is that the base fare is drastically reduced in New York City. This was not changed in other cities so this will drastically cut driver earnings in New York City. The other change is another reduction of minimum fares in Los Angeles and Orange County. This will heavily affect short trips in Los Angeles where drivers only make the minimum fare.
Lyft has already made these changes in select markets and I expect Lyft to match these rates. From the cities Uber and Lyft has changed prices in, this new pricing algorithm is only in their biggest markets where traffic is a constant issue.
Will All Uber Trips Pay More?
Most of Uber’s new pricing changes heavily favors short trips and does not incentivize long trips anymore. Now that Uber notifies drivers about long trips, I will be ignoring all long trips from now on as it is not as lucrative. With this new new pricing scheme, there is also much less incentive to pickup at the airport since airport trips tend to be longer. Most of Uber’s incentives revolve around trip count and they promote picking up more, shorter trips than fewer, longer trips. This new pricing scheme will align with Boost, Surge, and Quest bonuses.
This pricing scheme also incentivize drivers who are stuck in traffic. These trips have always annoyed drivers, but the new pricing scheme may balance things out. It remains to be seen if the increase in time payment will make up for the frustration of being stuck in traffic. I have spent 30 minutes going just one mile and this new pricing will get me an extra $3 on that trip.
From now on, I will be focusing more on shorter trips rather than longer trips.
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