For the last few years, Uber has present riders with a guaranteed fare rate called “Upfront Pricing.” Also over the past few years, Uber has steadily adjusted this upfront pricing to riders so that they can charge riders much more than what they pay drivers. There have been occasions where Uber’s algorithm gets upfront pricing wrong and charges too little, but from all the data I have seen, Uber typically charges a few percent higher. This percentage increases when there is surge, where Uber has been shown to take up to 50% of what the rider pays when there is high demand. Uber also typically loses some money on Uber Pool while earns it back with UberX and other types of trips.
Uber’s Upfront pricing is only in Uber’s biggest markets and not in every city. It is only in a small number of cities, but they tend to be Uber’s biggest markets so that is why Uber drivers hear about upfront pricing so often.
Last month, they have added a few features just for California drivers in their December blog post to address concerns from AB5, a groundbreaking legislation in California to better categorize employees and self-employed contractors. The biggest one is that California drivers can now see the passenger destination and estimated trip earnings. Note that AB5 is being challenged from multiple companies, including delivery companies such as Grubhub, rideshare companies Lyft and Uber, and truckers.
Uber Removes Upfront Pricing in California AB5
Uber released a blog post yesterday addressing additional changes to Uber in California to address concerns from AB5.
https://www.uber.com/blog/california/keeping-you-in-the-drivers-seat-2/
The biggest change is that Uber is removing upfront pricing in California and reverting back to the old surge multiplier. Uber will now only charge a maximum of 25% trip fee for UberX and 28% for UberXL, Uber Black and higher services.
Upfront Earnings with Uber Pool
Uber drivers will now be able to see their projected earnings on Uber Pool requests, along with their destination
Promotions will now offer a lower Uber Service Fee
Uber driver promotions in selected cities in California will change from monetary bonuses that are tied to trip count or consecutive trip count to total trips within the week that helps reduces the Uber Service Fee for subsequent trips. If the Quest promotion is for 50 trips and the Uber driver completes 75 trips, they will have reduced Uber Service fee for the last 25 trips. Boost will also change to reduce service fees for a set period of time during the day instead of monetary bonuses.
My Thoughts on the Latest Uber Changes
I believe that this is the biggest change to Uber in the past few years. Uber, Lyft and many other companies are afraid of California’s AB5 and will do everything they can to keep drivers as contractors. Regardless of whether AB5 holds up in court, there are now other states considering the same legislation due to Uber’s response to the law.
So far, all of Uber’s changes relating to AB5 have been good for Uber drivers. For the last year or two, I believe that Uber was manipulating pricing too much, reducing earnings for drivers, especially during high demand. I believe that Uber will make these changes in other states that are considering AB5-like legislation to prevent their drivers from being classified as employees.
I really like the removal of upfront pricing. I always feel as if the riders are getting charged too much while drivers are not being paid the proper rates during high demand. I would often see flat rate surge at $2 but then the rider app would show the rate at 2x, as many other drivers have across the country.
What do you think about all of these changes? Are they good or bad? Do you support AB5 or against AB5? Leave a comment below!
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