As a rideshare driver, maximizing the amount of money you earn per ride is not only smart, it’s essential to maintaining a solid business.
Drivers that can apply this strategy to every trip they complete can boost their profits. One of the fastest ways to do this goal is by taking advantage of surge pricing.
As you likely know, surge pricing is a multiplier applied to a fare when the demand for drivers is high.
Chances are you may not be familiar with how to use the multiplier in ways that benefit you the most.
It can be challenging to navigate the surge areas and determine if you should take advantage or not.
To help you cut some of these issues, we’re going over the most significant mistakes drivers make in regards to surge pricing and how you can avoid them in the future.
- What is Surge Pricing?
- Mistake #1: Chasing Surge
- Mistake #2: Only Driving During Surge
- Mistake #3: Unsafe Driving
What is Surge Pricing?
As we mentioned above, surge pricing is a multiplier that is applied to a standard fare. Rideshare companies apply this extra fee when the demand for drivers is high.
For example, let’s say a large group of people leave an area at the same time.
When riders log into their preferred rideshare app and request a ride, they disclose how many people they are traveling with. From there, the app compares the number of riders to the number of drivers in the area. If there are more passengers than drivers, a surge is activated.
By invoking a surge, drivers are likely to hit the road due to the increased surge prices. It is a surge is a beneficial tool that rideshare businesses use to ensure riders can get a ride when they need one by paying more to increase driver supply.
The odds that a passenger will be ready to get picked up, even when traffic is bad, increases with a surge.
This practice of using dynamic pricing can be very profitable for drivers if they know how to avoid key mistakes. If you would like more information on how Uber surge pricing works, check out this Ridester article.
Uber drivers can see real-time surge updates in the driver app. Dark red areas will have the highest surge, while lighter areas will have a lower surge fare. Passengers can see if surge pricing is in effect by checking the up-front pricing in the Uber app. Riders will see that they will have to pay extra money on top of the base fare.
Mistake #1: You Chase the Surge
Picture this. You are about to drop off your passenger when you notice an alert on your phone. A surge went into effect, and the multiplier is big. Excited to get in on the awesome multiplier action, you drop off your passenger, put the vehicle in park, and unlock your phone.
Then you look at the map. Surge pricing is going on; but, it is all the way across town. Is it worth for you to go to that area?
Unfortunately, this type of scenario happens all the time. The allure of making more money per ride is super tempting. So much so, that drivers tend to overlook the fact that by the time they reach the surge area it will likely no longer be in effect.
This is why “chasing the surge,” is one of the significant pitfalls drivers make — especially new drivers.
Remember, surge pricing occurs when an area contains more passengers than drivers. Each time a rideshare driver moves into a nearby surge area, the ratio of passengers to drivers shifts.
In time, the number of passengers in need will level out, and thus surge will no longer be in effect.
But chasing the surge might not be all bad. Let’s review when it might be a good idea to go after it.
As we mentioned in our example above, if you are nearby a surge zone, definitely head towards it. To elaborate, by nearby we mean you can get to the surge area within a few minutes.
Another way to chase surge is by planning for it. For example, if you know there is a big concert or another large event that is happening, odds are a bunch of people are going to need a ride.
Savvy rideshare drivers can position themselves to be near these locations before and after these events to catch surge. By being in the area where there will be a high passenger demand for rides, rideshare drivers can scoop up a few trips before it gets crowded.
You do not have to wait for an annual or monthly event happen to capitalize on when a surge is going to activate. Depending on where you live, there is likely to be a daily surge that goes on due to other peoples schedules. For example, rush hour.
This peak in traffic occurs in the morning, at lunchtime, and in the evening. Drivers can isolate where the heaviest congestion is and can go to those areas before surge activates every day.
By doing so, rideshare entrepreneurs can “chase surge” in a profitable manner that pays off.
Mistake #2: You Only Drive During Surge Times
If you can get a ride during the surge and make more money than a typical ride, it is worth your time to do so. But drivers that only go out and pick up riders during surge may start to notice a disheartening pattern: a low weekly paycheck.
Sure, big cities have a lot going on and rush hour is always causing a surge to activate. But, if you only pick up one or two rides during that time frame and then go home, you miss out on earning a decent wage.
Drivers who get hooked on chasing surge fall into this bad habit over time, which is why this surge pricing mistake made our list.
Let’s review the facts.
If you only pick up a couple of surge rides, rather than those rides plus regular ones, your paycheck will reflect that. The reduction in accepted trips can prevent you from picking up special driver bonuses given to drivers that complete a certain amount of rides when the promotions are active. These promotions are almost always worth completing. If you only drive during surge, it’s going to be very hard to meet the bonus criteria.
Furthermore, although Uber has surge notifications you can turn on, if your app isn’t on, you will likely miss the surge period. With Lyft, you can check the Prime Time heat map to see where the demand is. But if you aren’t looking, you likely won’t catch it in time.
Remember, surge pricing is a multiplier used to encourage drivers to pick up passengers in a specific area. This feature should be considered a perk associated with the profession, rather than an exclusive way to make money.
By thinking of surge pricing as a bonus, drivers can make the most money possible.
Mistake #3: You Put Yourself (and your Passengers) at Risk
Chasing surge in a planned way can be thrilling. So exciting in fact that drivers rush to return to the designated location as fast as possible.
This can be dangerous if your driving reflects your urgency.
Risking your life or the riders that have entrusted their safety to you over a multiplier is not worth it. The chance to catch that higher fare is not going to mean anything if you end up in a car accident along the way.
Regardless of how big a multiplier is, be a safe driver. Do not fall into the temptation of running a red light so you can get to the surge area that is across the intersection.
Drivers that can be professional will be able to reap the benefits of surge pricing when activated, which will often happen unless you are in a smaller town. So be patient.
If you are in one of the less populated areas or excited about the opportunity of surge pricing, consider relocation.
You don’t need to move to a new city to make this work, but commuting to a larger city might make sense. Many Uber drivers who live in the suburbs make a living by taking a passenger downtown in the morning and staying there until it’s time to call it a day.
Even if you only head towards populated areas during a significant event, you increase the odds of being able to get in on the surge pricing action. Be safe along the way.
Surge pricing is awesome. It is a useful tool that both Uber and Lyft use to increase the number of drivers on the road to match the need of riders.
When the surge is activated, passengers pay a bit more for their standard fare to guarantee that they can get a ride. The extra fee riders agree to pay is applied to the fare as a multiplier. Depending on how many people are in need of a ride, the surge pricing multiplier can get pretty high.
Due to this bonus, drivers see an incentive to go out and accept ride requests. Being able to have a dedicated fleet in this manner helps rideshare companies continue to flourish, as well as drivers if they know how to avoid falling into surge pricing pitfalls.
This occurs when the surge pricing multiplier is high. Drivers can start to focus on how much money they could make with surge, rather than if they can get to the area in time.
Do not to chase surge when it appears.
There are times when it is acceptable to leverage the multiplier. For example, if a surge is happening nearby, go for it. Bear in mind, the rule of thumb for what is considered “nearby” is any location you can get to safely within a few minutes. Do not run red lights or ignore stop signs to reach a surge area faster.
Another example of when it is acceptable to chase surge is if you have planned for the profitable time frame ahead of time. Noteworthy events include rush hour, big concerts, or large festivals.
Drivers should be able to stock up the essentials and position themselves according to demand before the event date. Drivers that can be in or nearby these surge hot spots increase the odds of picking up ride requests before others.
It is worth noting that choosing to only work during surge can have adverse effects. Namely, a reduction in your weekly paycheck. Remember, no matter how profitable a surge ride request is, if you only get a few complete before calling it a day, you are not going to make as much money as someone who drives normally
Surge pricing is a profitable way for drivers to make more money per ride. Still, this multiplier is a bonus that should be capitalized on when activated rather than a primary source of income.
Keep this fact in mind while you are running your rideshare operation.
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