Uber recently cut their prices between 20 and 15 percent in Perth, Melbourne, Brisbane and the Gold and Sunshine Coasts. Here’s why Uber drivers are upset and why riders will experience more surges and less availability.
Uber says the price drop will encourage more riders to sign up and draw them away from using public transport.
Only slightly, possibly, and not nearly enough to justify the price cut for drivers. Drivers can obviously only complete a certain number of trips per hour, so there is only a very, very marginal increase in an individual driver’s activity.
In reality, the 20% cut comes straight off the bottom line for drivers, basically meaning that drivers lose 40% of their take home pay, see: here for more details.
Uber guaranteed hourly earnings (but still deducted their 20% fee) for only a few hours during busy periods (eg: late Friday and Saturday nights) and only for the first month after the price cut. See here how that $30 breaks down.
There are no longer any guaranteed hourly rates for drivers in Queensland and Western Australia. Guarantees in Victoria are due to end in the last week of April.
In a nutshell: More surges and less availability.
Many drivers have had to stop driving and seek other employment, cut down to part time work, or now choose only to work on busy nights when there is Surge Pricing. This means that there are fewer drivers on the road, which, due to rider demand, creates bigger and more consistent Surge Pricing for riders during busy periods. During these times, riders tend to pay even more than they did before the price drop.
Another consequence of the price cuts is that drivers are forced to be more picky about accepting pick up requests from long distances away. Many drivers will no longer accept pick up requests from locations more than 10 minutes away. It’s just not economically viable to travel that far for a possible small fare.
Uber have set no time limit or other constraints for the ‘trial’. Similar price cut ‘trials’ have occurred in over 80 cities world wide and only a handful have reverted to normal pricing.
The RSDAA has met with Uber to discuss all the issues that the low prices are causing for drivers and riders. We hope they listen.
Please email firstname.lastname@example.org to tell them to pay their drivers fairly or reach them on Twitter at @Uber_Australia