Wednesday, February 11, 2015

How are UberX drivers making money with flat rates?

As you may know, Uber is running a promotion for UberPool. Any ride requested and completed in San Francisco city limits will cost only $5. Furthermore, any ride taken outside of San Francisco and to SFO will cost only $15. Several Uber clients requested information on how UberX drivers are making money with low flat rates.

For the most part, UberX drivers are receiving consistent fares and continue to earn the cost of the original trip. If two UberPool riders are connected, the overall cost of a trip is paid to drivers. Therefore, Uber clients are more willing to request rides under a surge rather than wait it out.

UberX surges are constant during the busiest times. Keep in mind that San Francisco is a dense city and hundreds of thousands of riders require transportation services to travel throughout this region. People are always in need of airport car services. On busy weekend nights, clients need a ride home from Downtown San Francisco, the bar and club scene and from other hot spots. There are a number of clients who delay requesting an UberX at high surge pricing. This is where UberPool enters this ride discussion.

For a limited time only, UberPool can be taken anywhere in San Francisco city limits at a $5 flat rate. No matter what surge pricing this trip is ordered under, this UberPool ride will only cost the rider nothing more than $5. Even so, an Uber client using an UberPool can travel outside of San Francisco and to SFO for a $15 flat rate.

UberX drivers are receiving constant UberPool ride requests under surge pricing. This means UberX drivers have less downtime, more surged rides and greater earnings. Occupied UberPool rides with surge pricing keep UberX drivers busy throughout the day and/or night.

Prior to this UberPool promotion, surge pricing applied to UberPool requests. However, solo riders who were not connected without another rider would receive a 20 percent discount on this trip. If connected, both parties share of portion of the trip. UberPool trips are split according to the time spent in this UberX vehicle.

For example, an Uber client is picked up in the Sunset and travels 8 minutes to retrieve a second rider, they are essentially accruing an additional 8 minutes before the second rider joins in. However, the second rider shares the cost of the ride from their pickup location to the first rider's final destination. But for the most part, the second rider incurs a solo cost from the first rider drop-off point to their final destination. If this distance is 5-8 minutes, then the shared ride is basically calculated to reflect both riders occupying this ride, and then assesses this trip when both riders are solo.

We have the first rider paying slightly more, but far less than if they take an UberX or an UberPool solo. The second rider is sharing the ride from their pickup address to the first rider drop-off. Then, this second rider is riding solo to their final destination. Shared rides offset the total cost of a solo ride. Riders have an opportunity to meet new people. In a social sense, what we've heard is that UberPool is a hit or miss. Most of the time, clients may greet new riders but remain silent the remainder of this trip. Then, of course, two riders connect and chat the entire trip.

Sharing an UberPool saves money. With the January 22, 2015 launch of flat rates of $5 (within Sf city limits) and $15 (SFO and outside of SF), Uber clients are requesting rides at all times. It doesn't matter if there is a surge or not, these UberPool riders are requested and taken. This means that UberX drivers are receiving constant rides at surge prices. As a result of this, UberX drivers are making more money than without these flat rates kicking-in and giving them high fares.

Once this UberPool promotion ends, Uber clients are likely to keep a close eye on surge pricing. They probably won't take 2X-3X surged rides, considering that such trips could cost them a substantial amount if and when another rider joins in and re-routing is involved during this trip. However, UberPool under surge pricing can be beneficial in circumstances where riders travel to the airport. A 3X surge to SFO could cost an Uber client between $80-$120. Sharing the cost of a high surged UberPool ride can reduce this overall total to $40-$60.

UberX drivers who are willing to drive long hours in San Francisco during this current UberPool promotion will make great income. They will have less downtime because clients will occupy their vehicles, take more surged trips, and search less for ride requests. Flat rate pricing is motivating clients to request rides at all times, even at high surge pricing. UberX drivers receive the full cost of the trip, which these drivers deserve after running at a high operating cost in 2014.

Giving UberX drivers the full cost of UberPool rides during surge pricing and in rides that cost more than $5 in city limits and $15 in outside the city trips show appreciation to their devoted service. UberX drivers and Uber clients are being rewarded for their loyalty. Uber clients have taken surged rides and paid higher than expected fares. However, these riders are still saving money as compared to taxi services.

Even though Uber is accepting the remainder of the cost, this UberPool promotion is good advertising to promote this carpool service through a practical approach. Uber clients have a great opportunity to test UberPool in real-time. Advertising online and via print ads are effective, to an extent. In giving riders access to flat rate rides, Uber clients experience the real value of carpooling.

Most of all, UberX drivers don't have to struggle to find new rides. Many clients are taking rides throughout the city of San Francisco. Given this fact, drivers can make better money to cover operating expenses. The cost of gas, repairs, maintenance and all other expenses cut into earnings. After a year of driving, there is not much income remaining to cover bills. Drivers operating under a moral umbrella may see value in driving people, social interactions and earning extra money to make ends meet. Driver promotions help to increase activity and earnings.

UberX drivers are making more money under this current UberPool promotion. They are receiving surged rides and are compensated for the total cost of the ride beyond $5 and $15 flat rate prices. Clients asked how drivers are making money with cheap flat rates. These UberX drivers are taking more trips, occupying their vehicles, receiving the full cost of rides and have less downtime searching for ride requests. Once normal UberPool pricing goes back into effect, these earnings will decrease but rise above normal periods before this UberPool promotion.

Happy Ubering!