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Friday, September 19, 2014

UberPool requests kicked out to UberX drivers

After the 14 percent price reduction went into effect this past Monday September 15, 2014, UberX drivers are now seeing cheaper rides. No ride filters and cheap fares, in large regions such as the East Bay, are adversely impacting driver earnings. An UberX driver must travel several miles to give a client a ride for $5. Minus $1 for safe rides and Uber's take, a driver is only seeing $3.20. Fortunately, UberPool requests are getting kicked out to UberX drivers to salvage these less than stellar earnings.

UberX drivers have access to UberPool clients who can ride alone without making another stop to pick up a second rider. Because UberPool drivers must be approved to give rides on this carpool platform, lack of these drivers defer ride business to UberX drivers. Such rides are in dire need, especially since recent fare reductions decreased earnings quite a bit.

UberX drivers are told that surge pricing at busy times will give them more business than usual. Prior to this price reduction, drivers got plenty of rides and made decent money. Now, the price reduction, further out pick-ups and poor GPS pinpointing, drivers are investing additional time. One UberX driver reported earning $20-$25 in 2 hours. After Uber commission and safe rides reduction, this driver will see $16. This does not include the cost of gas and wear and tear on their vehicle.

How does surge pricing benefit UberX drivers when clients are waiting to request rides? In the Marina District, clients cancel the most rides in the quickest amount of time. It may take an UberX drivers several cancellations before landing one decent ride in this district. Needless, there is another problem creating issues on the UberX platform.

The new ETA feature fails to adjust the time accurately. A few clients called to confirm if their drivers were still in-route to pick them up, because the ETA stayed at a specific time for several minutes. A driver must explain to their client how this GPS works, and that it may not reflect the driver's real position. If a vehicle is traveling perpendicular, they are not moving closer to this pick-up address. Once the vehicle travels vertically, toward the pick-up address, this is when the ETA begins to shave off time and reflect real-time distance.

For example, a driver who receives a Marina District request while driving on Market Street in San Francisco will not draw any closer until they move North on the Embarcadero or make a left on Drumm St. and another left on Sacramento Street to eventually catch Franklin Street. Traveling horizontally will not change the ETA unless this is factored into the overall distance.

UberX drivers find this ETA a good but bad option. Clients are expecting their drivers to reach in the time shown on the app; however, traffic, stop lights, and construction are unaccounted for in this estimated time of arrival. It is not that simple to breeze through busy city streets and reach in the exact time stated on the app. For the most part, UberX drivers make really good time and clients respect this effort. Nonetheless, this new ETA feature is causing headaches.

At times, the app indicates a driver is 2 minutes away and they've already arrived. Drivers send text messages to inform their client that they're waiting at the requested address, and to let them know if they're at another location. If clients are not waiting outside near the icon, it is a good habit to send a text message, and then wait 5 minutes for a response. After this 5-minute rule, call the client.

UberX drivers are told that price reductions create business. We've heard that drivers are making more money. How many additional trips does it takes? How many more hours are worked? How many more miles are driven? Reducing prices suggest that drivers are taking more trips, working more hours, and covering more miles. The best indicator to measure increase in earnings is the Weekly Summary. However, Uber has failed to send two of the last three summaries. In these weekly summaries, drivers can view the number of trips taken, how many hours worked, and their earnings.

Why all of a sudden are two summaries missing in the last few weeks? Uber has been consistent with sending out these summaries over the past several months. August 25-August 31 and September 8-14 are missing. However, an email arrives to inform drivers that fare reductions they incurred from giving out promos have increased overall earnings. On August 31, 2014, the safe rides $1 incentive ended. In the past few weeks, Uber has collected this $1 safe rides fee and are deducting it out of the driver's account. Is the incentive for drivers to give more trips so Uber can make more money on $1 safe rides and with commission? Missing weekly summaries may show the real hourly-to-trips-to-earnings ratio in result of fare reductions.

Drivers were earning more money in August than in May because Uber incurred the savings extended to clients through a 15-25 percent reduction. With the price reduction beginning this week, drivers are making 14 percent less. They are incurring the savings as a way to create more business during slow times. Shouldn't these savings be applied to the slow times and not the busy times? It may reach the point where fares are slashed so low that it doesn't make sense to drive anymore. Where is the bottom line? How low can ridesharing service prices drop? Demand for rides went up because Uber incurred the savings to stimulate business. Meanwhile, clients are now saving at the expense of drivers.

Is the data showing comparable earnings from month-to-month actually reflecting only drivers working 40 hours or more? In the weekly summaries, the average amount of hours drivers worked are 27 hours and less. We can really compare data from drivers who work less than 40 hours. However, we can compile all hours driven, number of drivers in the mix, and calculate the average earnings. There are quite a few drivers who don't earn 50 percent of the average earnings stated in summaries.

Good data is for drivers to provide ridesharing services at different times of the day and report back with the hours worked, trips taken, and amount earned minus $1 safe rides fee. We can determine if drivers are earning more money per hour with this recent price reduction.

In comparison, price reductions are Happy Hour in restaurant bars. Customers have to order more drinks at discounted prices. This Happy Hour attracts more customers that may spend additional money on menu items and signature drinks. The restaurant, servers, and bartenders are earning money. As shown in an episode of Jennifer Falls, the Wayne character holds Happy Hour for everyone, all day long. The manager rushed to stop this Happy Hours, because the restaurant will take a huge loss and continually doing this can close shop.

In ridesharing, clients must request rides during surge times to offset price reductions deferred to drivers. If clients pass up on surge pricing and wait, drivers will struggle to make money. With $1 safe rides fee given to Uber and 20 percent commission taken out on the remainder, as well as cost of gas and repairs, there is not much money left to consider ridesharing a reliable income generator. Increasing rides during slow times can help drivers who normally avoid these times to drive.

However, maintaining these price reductions through busy times give clients much cheaper fares. Drivers must work additional hours, take more trips, and drive more miles to earn 10-15 percent more, if that makes sense. There is an added risk that transporting more clients can make or break overall ratings.

A good example of price reduction in the workforce is if an employer cuts hourly pay by 14 percent. Instead of earning $20 an hour, you are now making $17.20 an hour performing the same job. What if the employer expects higher production with this new hourly drop? In order to make up for this $2.80 loss per hour, a worker must work at least 1 hour of overtime. A total of 9 hours worked to make up for this hourly drop.

Lets look at a driver earning $1100 in 40 hours. They would probably need to make 70+ trips in a week. In this $1100, the $1 safe rides are already deducted and not a part of the fare amount. Uber receives 20 percent of the $1100, which reduces the driver earnings down to $880. Another $150-$400+ is deducted to replace gas, reducing this amount to $480-$730. If unexpected repairs surface, the remainder of this income is wiped out. Maintenance cost is also a factor because with more miles come more frequent oil changes, tire change, and brake replacement.

Now, this driver is operating at a deficit and may have exhausted all their resources to afford gas. No gas means, no driving and no earnings. Ridesharing is a sporadic job. One moment, a driver is raving about making good money giving surged rides. The next day, a driver is giving cheap rides and making longer pick-ups to lose time. All and all, the driver is not making much money.

When it's said and done, the driver is left with a beat-up vehicle and little to show for the hours invested on the road. However, drivers can maximize their ridesharing by discussing their outside skills. The car space is basically a job firm on wheels. Clients represent your future connection to establish a long-term career. You just never know. Take the good with the bad. Reduced fares require more trips. What a driver once earned giving 50 rides will now demand them to complete another 7-10 rides.

If UberX drivers remember, surge rides could net them $40-60 on 3X. These surge trips also benefited the client, as a vehicle arrived right away to take them to their jobs after missing the bus and/or not having enough time to wait for public transportation. It is all about efficiency, such as arriving on time at a pick-up address and reaching a destination in time. With surge pricing, clients can choose to wait. We hear of surge pricing in the East Bay failing to deliver ride requests. When drivers are in the heart of surged regions, somehow a non-surged request arrives and this requires them to make a longer pick-up. Therefore, these drivers miss out on the best surges.

Another problem is the lack of trip filters. 50 minute requests are hitting drivers from across the bay. If a driver rejects this request, the same request is kicked back to them. As drivers know, the acceptance rate measures reliability. Drivers must be careful not to reject too many rides. During previous promotions, drivers are expected to keep high acceptance rates to qualify. If a driver is positioned by the Marina, there is a good chance a North Bay request will arrive. The lack of trip filters waste valuable time, especially when drivers make these long trips and clients are no-shows. Drivers confirm via phone that clients will be there. However, clients decide to take a taxi and/or their friends or family pick them up. They don't confirm this with the driver.

To top this off, this is the client's first time being a no-show and no cancellation is charged. We heard drivers making 20-30 mile trip, only to discover that clients are no-shows and probably at home sleeping. During another time, a client canceled an UberX ride at the pick-up address via phone. The driver drove 25 miles to pick this client up. This shows a lack of respect. The client could cancel the ride before 5 minutes, so the driver can avoid losing valuable time, money and gas. When the client is not losing money, they are oblivious to the impact of their actions.

Trip filters can fix this no-show and cancellation issue, because drivers now have a choice to service a particular area rather than deal with long distance requests. SideCar has trip filters. Lyft used to allow drivers to select the percentage of donations a passenger gives past drivers. This way, a driver will only receive requests from passengers who donate this percentage or greater than that amount.

Ridesharing is too new to address all problems in one sitting. As time goes on, drivers and clients will provide valuable input to improve ridesharing platforms. This recent price reduction is not a good sign. However, UberPool clients can offset ride business and make up this difference. No UberPool drivers mean more business for UberX drivers. The ETA is a current issue that require an update. It doesn't take into account traffic, construction, stop lights and other delays. Clients are contacting their drivers to request an update. No distance is shown on the app interface. A driver must click on "info" or "overview" to view the name of their client. If "overview" is clicked on, the driver must click on "navigate" to restart the directions because this action pauses the in-app navigation. In time, we will see what issues are resolved and which continue to create problems. Hint: Trip filters.


Happy Ridesharing!