Tuesday, September 13, 2016

Uber listened to who and did what?

Uber listened to who? Did Partners actually give them advice to revamp an hourly guarantee that kept drivers on the road during peak time hours? Apparently, Uber responded (who requested this change?) by unveiling a new incentive program to boost earnings. It is hard to believe Uber Partners would request moving away from a positive hourly incentive that provided drivers great earning benefits.  

Uber is experimenting with a new hourly offer without any blocks to disqualify drivers. To be honest, this new incentive is not worth a driver's time to get on the road in the morning and during evening commute times. Instead of keeping previous hourly guarantees intact, this ride giant is introducing a questionable incentive to possibly save money. Why would they want to match a driver for $35-$40 an hour?

This new incentive will likely decrease hourly earnings. Drivers may lose motivation to get on the road during these times, as the benefit of receiving these new incentives won't compare to the old hourly guarantee structure.

On weekend nights, business has been so slow because rider cancellations and no-shows are impacting earning potential. As a result of these riders, East Bay Area drivers depended on hourly guarantees to meet these flawed policy standards. New revised incentive program beginning on September 12, 2016 will change driving habits for many drivers.

The greater of the two, 1.5x surge or higher surge within specific qualified hours, will be credited to drivers servicing riders at approved times. Unfortunately, this revision will impact the supply of drivers on the road on weekend nights.

Before, drivers would receive guaranteed hourly earnings driving between specific times. But now, this new incentive is removing restrictions that could disqualify drivers. Removing restrictions could add a boost to earnings, but this won't help them average $35-$40 an hour.

What made driving during peak times rewarding were Uber's guaranteed incentives that paid out $35-$40 an hour. As most East and South Bay Area of Northern California drivers know, it would take driving 1 hour with no traffic to clear $40-$42. Good luck making that hourly rate completing non-surged trips and short trips. It won't happen!

Surge pricing is not as lucrative as it once was in 2013-2014. Riders are growing price conscious to wait until surge pricing passes over before eventually requesting a ride. Even with 2.0-2.5X activated, the cost of a trip is still relatively cheap for riders staying within the East Bay. We won't see expensive $100+ rides anymore. Unless clients are requesting rides in San Francisco and the North Bay, rides won't pay much money.

Will drivers wake up to drive between 6am-9am to make 1.5X on trips? How many trips can a driver complete with heavy traffic flow clogging up the roads? Honestly, not many rides can be completed because most riders need short trips to BART. God forbid you get an East Bay to SFO trip in heavy traffic without UberPool and another connecting rider to allow use of carpool lanes.

In any case, this new incentive program (surge pricing boost) may undermine the production of Partners. The only good promotional program remaining is the trip milestone bonus structure that Uber continues to hold weekly. Without this program, making money with Uber would be unlikely after all fees, gas, car payment or leases, repairs, maintenance, supplies, car washes, and other expenses are deducted off the top. Lyft drivers gain access to higher earnings and receive in-app tips.

It would be a good idea to return the past $35-$40 hourly guaranteed program. Otherwise, drivers are better off giving rides in areas with higher rates: San Francisco and North Bay. East Bay riders lack common courtesy to wait outside of pickup address for UberPool trips. When these riders are no-shows, they put drivers in an unfair predicament to cancel them and get warned by Uber for canceling such trips. Follow in-app prompts to cancel pool rider and get warned for this action. Catch 22!

The final conclusion is that Uber listened to their in-house concerns. They probably implemented a new incentive program to benefit their supply needs. It will be interesting to see whether this surge pricing model will deliver higher earnings. Nevertheless, drivers will have to work much harder to maintain their peak time earnings.

Uber drivers are going to earn much less than $80 during 7am-9am and $70 between 5pm-7pm. Uber on!