Over the past few years, Uber drivers have noticed an alarming trend that is playing out over and over again: Uber keeps lowering prices, and as a direct result, drivers make much less each time.
At first glance, the decrease in earnings appears to simply be caused by prices dropping, but after doing a little research, we noticed that Uber is actually taking a much higher portion of driver earnings than the advertised 25% commission.
In order to stay in business, rideshare companies charge hefty fees to passengers for their service. These well-known fees come in the form of the standard ride fares that are calculated by taking a combination of distance traveled and time spent in the vehicle.
For a long time, drivers have believed that Uber and Lyft only take a 25% cut of these fares. They’ve accepted the commission rate, and have just been happy that these companies are allowing them the chance to earn by providing a steady stream of paying passengers.
However, what most drivers don’t realize is that there are additional fees that the rideshare companies take, and the Uber booking fee is actually much higher than that 25%.
The booking fees that Uber and Lyft charge don’t get passed along to the driver, but instead go straight to the rideshare companies directly. This means that passengers are charged a fare and a booking fee, which drivers see absolutely none of.
The direct result for drivers: The lower the ride fare is, the higher Uber’s commission becomes. And the higher Uber’s commission becomes, the less rideshare drivers make.
Beacuse of this, drivers are forced to work twice as hard to maintain earnings, driving twice as far and working twice the time. It’s a hard correlation go grasp, and drivers are beginning to get a bit frustrated.
To better understand this, let’s visually analyze the situation in the infographic below.This stems from a recent study of multiple trips in the San Francisco area show that the actual driver pay, after Uber’s commission and Uber booking fees, is actually much higher than the standard 25% that drivers are assuming Uber is taking.
Result for Drivers
As we outlined above, this Uber booking fee directly results in a higher Uber commission, meaning drivers will have to work much harder to stay the the level of earnings they’ve grown accustomed to. Either drivers are going to have to figure out how to make a ton of extra tips, or they’re going to give up and deactivate their acounts alltogether. Either way, time will tell.
Did you know that the actual commission Uber is taking is much higher than 25%? How do you make up for this cut? Let us now in the comments below!