Hacker News Reader

Comment by awwstn | Hacker News Reader

Here's what I think led to this:

UberX was priced appropriately for the market, but Uber wanted a larger cut of revenue. (Say average ride was $12, Uber gets $2.40.)

In January, Uber announced a 20% decrease [1] in UberX prices. (Continuing hypothetical, average price could be $9.60, and Uber gets $1.92)

This week, Uber adds the $1 safety fee, of which drivers get none. Now, continuing my hypothetical averages, the average ride costs a consumer $10.60 (less than before), and Uber takes $2.92 (more than before), and the driver is taking the loss.

Crafty, I guess.

[1][edit: here's the 20% price drop in January I mention above: http://techcrunch.com/2014/01/09/big-uberx-price-cuts/ ]

View on HN

For that to be true the average ride would have to be under 25$. (which it probably is)

I agree that this makes some sort of sense viewed from that angle, I don't think it's a pricing structure that jives well with the brand as a whole though. I think one of the strengths of Uber was the clear pricing model and this layer of obfuscation doesn't help that.

My understanding from talking to drivers is that when they announced the price change for UberX, they cut their commission from 20% to just 5%. So that means Uber now gets $1.60 and the driver gets $11.40 from a $13 fee. If this is a margin growing scheme, everyone at Uber needs to take remedial arithmetic.

They raised the commission back up to 20% at the same time they added the $1 "safety" fee. Here's a reference:

http://www.geekwire.com/2014/uber-adds-1-safe-rides-fee-pass...

My read is that they thought they could keep Lyft from taking their market-share by losing money on every ride and relying on their deep pockets, but then Lyft got a comparable amount of money to Uber, and Uber was like, "well, guess we won't be waiting them out."

Ouch, that shift back to 20% is gonna hurt them bad with drivers, and the $1 adds insult to injury.

No, in Baltimore at least Uber has _always_ taken a 20% cut. What they don't mention in the article is Uber also started charging drivers a $10 per week "Data" fee for use of the Uber phone you have to have to get fares. So they are recouping more than just $1 per trip.

I'd be really surprised if Uber thought the short-term value gained through the extra income would be larger than the long-term loss of value through goodwill caused by adding this charge. All of Uber's rhetoric is about the long game.

Supposedly this is developing into a theme. Uber doesn't want to take a cut in revenue, and higher prices drive away customers- so the drivers usually get the shaft.

Reply on news.ycombinator.com