Uber launched its Upfront pricing model on Jun 24, 2016, on all it’s car services. Uber advertise the move as being honest with the riders. They do the math up front, and riders know what they’ll be charged exactly. Uber proclaimed in the blog post:
Upfront fares are calculated using the expected time and distance of the trip, and local traffic, as well as how many riders and nearby drivers are using Uber at that moment. And when fares go up due to increased demand, instead of surge lightning bolts and pop-up screens, riders are given the actual fare before they request their ride. There’s no complicated math and no surprises: passengers can just sit back and enjoy the ride.
But what Uber didn’t tell the riders was that the Uber drivers would not be paid according to what riders are being charged. Uber drivers used to get 80% of the fare, surge pricing or not. Uber drivers are still paid by the mile and minute calculation after the new pricing model roll out. It was a way for Uber to end its surge pricing model not only for the riders but also for the drivers. What I have found since the launch of ‘Upfront’ pricing model is that there’s rarely any surge during rush hours or weekends for the drivers, while riders are still getting charged 3-4 times the price, and sometimes even more.
A few days back I got a message from a friend on Facebook. He was furious about an Uber trip. He drives in Dallas, Texas area. Check out the screenshots I got from him:
The price Uber charges the rider and what Uber pays the driver is way off! He only got 31% of the fare. Yes, Uber took 69% of the fare. How is this fair to the driver? Uber is charging surge pricing to the rider, although the rider doesn’t know because of the ‘Upfront’ pricing. The app does not show if the rider is being charged more or less than the average price. If this is not a way to screw the driver, then I don’t know what is.
Also, the long pick-up fee that Uber added recently doesn’t hold water either. My friend told me that he drove more than 20 minutes to get to the rider. As you can see from the trip screenshot above, he only made $1.30. Uber still wants to charge surge pricing to the rider, but only wants to pay pennies on the dollar to the driver.
He emailed Uber to get an explanation on the price differential. Here’s Uber’s response:
Thanks for reaching out, [Redacted].
I understand your concern regarding Uber service fees.
I would like to inform you that service fees are not a set percentage. The service fee is the difference between the rider’s fare and the partner’s earnings.
Uber estimate will calculate the length of each trip and generate an upfront fare for the rider before the trip starts. If the trip price is more than the base + time + distance (+ surge), Uber will collect the difference. And when the price of the trip is less than the base + time + distance, Uber will cover the cost. The driver will always make the same rates, independent of the price estimate.
Partner’s earnings will always be calculated using base fare+time+distance. The service fee amount can vary based on the upfront fare charged to the rider.
There are times when what a rider pays may be higher or lower than what you earn for a trip. Our goal is to keep driver rates consistent, while allowing us to offer new options for riders like flat fares and subscriptions.
For full information on your trip breakdown, including what the rider paid and what Uber received, tap “Fare Details” on your trip receipt.
You can find an explanation of the Service Fee in your Financial Terms Addendum. To view this document, please log in to your partner dashboard, and click on “Profile” at the top right corner of the screen.
I hope this helps. Please let us know if you need anything else.
Here’s the screenshot from another Uber driver that commented on one of our post on Facebook Page:
Different driver, same story. Uber is taking the majority of the fare while leaving the driver with the standard fare calculation. Didn’t Uber reason that the price only goes up when there’s a shortage of drivers or high demand times? So, why the drivers are not getting any share of the high demand?
Seriously, this is crossing the ethical lines. Uber is trying to recoup their losses in the US by overcharging their riders wherever they can, while still paying the least amount of money to the drivers.