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Tuesday, January 06, 2015

New Uber Summary reveals a lot about New Year's Eve

Did UberX drivers make money on New Year's Eve? One client shared that her friend who earned $800 last year driving on New Year's Eve couldn't make money this past New Year's Eve. He stopped driving to avoid wasting time and resources. The new Uber Summary, which returned a few weeks ago, revealed that the average driver didn't earn $800 for an entire week.

Ridesharing drivers are not making close to their past income. $20-$30 unsurged trips were once common in San Francisco, but these trips without a surge won't earn drivers nearly as much. Drivers will be lucky to get a trip from Downtown San Francisco to the Sunset District for $18-$20. Minus the $1 fare and another 25% commission, this 20-25 minute trip earns a driver $15.

Ridesharing competition has hurt the bottom line. Fares are way too cheap, especially in Los Angeles. If drivers want to make money, keep moving to get requests and/or consider parking during slow times to avoid wasting gas and time. The ride requests will come, but scouring the city to locate fares may frustrate drivers. Driving through the surged areas is no longer a strategic plan. Clients are not taking these surged rides like before, so the waiting game is influencing time.

What we hear often is that clients cancel surged rides to request another ride under no surge. This activity affects the drivers, who invest time into reaching the client and may miss out on surged rides that are reliable. Too many cat and mouse games impact the bottom line.

In the recent Uber Weekly Summary, the average driver remained online 20.4 hours. These drivers earned an average of $29 per hour before commission. They completed an average of 40 trips. What these numbers tell you is that drivers didn't earn as much driving on New Year's Eve. It doesn't matter if Uber completed 2 million trips on New Year's Eve. What does matter is that drivers didn't earn as much, got discouraged, and stopped driving.

The average driver earned about $600 last week. You would think that driving on New Year's Eve would make a driver $600. Last year, Uber drivers made a fortune driving because of surge pricing. This past New Year's Eve, drivers didn't see any surges activate in San Francisco until 12:30am. Unfortunately, surge pricing didn't exceed 2.5X.

The drivers who earned the most money were positioned in the North Bay, which surge pricing exceeded 7.1X. Clients actually requested rides at these high surges. As shown on the client app, Uber drivers appeared and all disappeared. No Uber drivers were available on any of their ride platforms. One request under 7.1x would make a driver a nice sum. Imagine completing 3-4 rides under this surge.

San Francisco drivers didn't have the luxury of operating under a good surge. Was demand low? Not as many people in San Francisco? Or was surge pricing kept at a constant to stimulate rides? We all know the recent 15% drop in prices make current rides unappealing now. Lucrative ridesharing earnings lost luster once price wars sliced fares in half.

Driving a client from Downtown San Francisco to outer Richmond in the late hours may impact time and earnings. What if this ride is the only trip a driver completes in an hour? They lose out. This is why many taxis refuse these rides out into the Sunset and Richmond districts.

We know of another driver who earned only $100 driving an hour after New Year's Eve passed. This driver got a few surged rides, but the majority of rides were low fares. Luckily, this Uber driver got a ride into San Francisco to make the bulk of their $100. After Uber commission and $1 safe ride fees, this driver would receive $70 driving on New Year's.

Do we believe the $50 per hour average between 7pm-3am and/or the $80 per hour at 12:30am-2:30am? Based on the average driver earnings last week, we don't see this as possible. Biased opinions aside, ridesharing drivers are struggling to get rides and make money.

Uber is coaching their clients on how to avoid surge pricing, which is primarily the reason drivers made money. Clients are saving money on reduced fares and now get help to avoid surge prices. The wear and tear, repairs, maintenance costs, gas, tolls, snacks, water, and other expenses make ridesharing a minimum wage job.

Minimum wage workers don't face the high risk of being on the road. Ridesharing drivers who drive without a strategic plan will not make money. This line of work is not profitable without driving on busy nights, at busy times, commuting hours and in areas with constant business. Los Angeles drivers must complete more rides and stay on the road much longer to make money. Nevertheless, clients are waiting it out to request rides to avoid surge prices.

New Year's Eve driving was a bust. No surges until 12:30am on New Year's Day. North Bay drivers were the real winners, which once ride under 7.1X would make them a mint. San Francisco didn't connect with as many rides under surge pricing. Educating the client to request rides before and after surge pricing is activated hurts the driver population.

Sidecar didn't charge their drivers commission (those who met their hourly and trip requirements). They rewarded their drivers with bonuses. One driver, per region, received a $500 bonus. Sidecar drivers receive tips. They can activate 1x-5x price multipliers on demand.

UberX drivers can't get tipped via the client app. Uber hasn't added this feature yet. UberX drivers are losing hundreds per month without a tipping feature. We know of many drivers who didn't receive holiday tips. Dropping the ball on this tipping feature shows a lack of respect for drivers.

Lyft drivers get tipped often to make extra income with tips. They also get Prime Time, which the fare beyond 1.0+ goes to them as a tip. We're sure that Sidecar and Lyft drivers earned good money on New Year's Eve. The Uber Weekly Summary is transparent with the numbers, telling us that the average drivers worked 20.4 hours last week and made on average of $29 per hour before commission.

What is puzzling is that drivers had to work extremely hard this past weekend to get rides. It is not as easy to get rides, which every ride request is well appreciated.

The biggest winners were clients and Uber. The biggest losers are drivers. The average driver earned $600 last week before commission. Drivers definitely want to get on the road to make that money. Most of the time they lack the resources to afford driving with a poor cash-flow system, waiting 8-10 days to get paid on Monday-Wednesday trips.

Congratulations on 2 million rides Uber! If impressing the media and general population with reaching this monumental number of rides is the driving point, then that is an accomplishment. Once commission is paid out and $1 safe rides and airport tolls are deducted, Uber drivers don't see as much of their earnings. No New Year's Eve bonuses and no incentive to drive without surge pricing in the city made this so-called busy night a bust.