Ask HN: How can Uber drivers make money when pool rides are so cheap?

11 points by newjobseeker 9 years ago | 16 comments

I've been taking Uber pool a lot lately. Sometimes rides are as little as $4 and I go clear across town from SOMA all the way to the north end of the city. How can they possibly make money on rides this cheap? Lyft prices on the other hand are much higher, sometimes as much as 4x.

Switches75 9 years ago |

If prices are surging here & there thru the day/night we are not making a dime. Uber's take on me is 25% (I WAS ONE DAY BELOW THE CUT OFF DATE TO BE AT THE 20% RATE) then wear & tear if you drive regularly would exceed 25-30% Then gas is +- 25% AND since we are "independent contractors we get 1099'ed & so at the end of the day we make no money. I enjoyed it at first but now that I look at the big picture after paying my taxes this year & all I can brag about is that I probably saved quite a few people DUI's & met some fun people along the way!

pyb 9 years ago |

"I asked if they considered to pay the driver more? [...] He then added that I must realize that they were not competing with Taxis for the drivers, but rather with Walmart."

https://www.alexkras.com/my-interview-at-uber/

flyingfortress 9 years ago |

I've been driving my own car with/for uber for over a year now. I have the grandfathered 20% Uber share fee deal and driving for them is barely break even. For the past 6 months, I've posted signs facing the PAX, taped to the back of the front seat headrests that clues them in about Uber's misinformation campaign which convinced riders that the tip was included and that it was distributed to drivers. Also I printed out any of the numerous national magazine stories (U.S. News and World Report, for one) and stuffed them in one of the seat pouches for PAX to read. The tipping in some cases has been generous ($15-$20) and in others, just a few dollars. The tipping makes the Uber driver experience marginally profitable until something better comes along. Most PAX feel good about tipping once you diplomatically clue them in. Like some will say "nice car, very clean." That gives me the opportunity to thank them and say it helps by encouraging tips. They're all surprised at that until I explain that Uber is fighting to be the low cost rideshare—especially when compared to lift, which includes a tipping mechanism in their app. When the rider compares destination estimates—which may be materially the same—Uber wins it for them because they really believe that the tip is included and that you don't have to add it as you do in Lyft's app. This is another example of how the unscrupulous and immoral Uber continues to climb to the top on the backs of the drivers... who, trust me, are not getting rich and barely making expenses.

jghn 9 years ago |

I've seen many drivers complaining on Reddit as to how many trips are effectively a net loss once one includes things like wear & tear, much less opportunity cost.

Most drivers seem to loathe pool.

CodeWriter23 9 years ago | |

If you're using your own car, it's a losing proposition, unless you never drive in between rides, which is impossible because you have to drive unpaid to pick up the rider. Vehicle costs $0.61/mile to operate, ridesharing platforms pay $0.83-$0.88 per mile. So do the math, if you're driving more than 1/3 mile unpaid for every paid mile, there's a loss. Don't forget paying the vig to the Rideshare network of 20-35%.

I'm not factoring in the time component of the fare, because for average rides it is immaterial. In Los Angeles, Lyft pays $9/hr for regular Lyft and $6.60/hr for Lyft Line. Only when there's a rider in the car. So if you wait 3 minutes after drop off for the next request (like if it's busy and you aren't in an alligator pit of drivers competing for requests. You can also end up waiting an hour between rides if you're really unlucky or get taken outside of the hip zones where riders are plentiful), then take 3-10 minutes to arrive at the pick up, then give a typical ride of 5-6 minutes, your time payments are less than $5/hr. Possibly less than $1/hr.

The only way to eek out a slight profit is to rent a vehicle under a partnership and hit your ride quota to get the rental cost bonused back to you. At that point, your expense is fuel, and if you hypermile the right vehicle, the cost is about $.10/mile. Then on top of that, you need to win the lotto several times daily and get the vaunted long ride with a $12-$20 fare or $80-$90 if you hit the jackpot and you'll then be doing better than working in fast food. But don't forget there are plenty of unpaid miles. Getting back to your hot spots to increase ride count/decrease idle time, returning from the sticks after the jackpot ride, and driving home from the other side of the region when you're too tired to drive any more.

strathmeyer 9 years ago |

Well isn't this multiplied by the number of people in the pool? What is the normal rate for such a ride? Is is four time cheaper than Lyft because they are taking four people?

Uber's gameplan is to dominate the app market so when self-driving cars are invented they can own every car on the road.

kspaans 9 years ago |

It's Uber who loses money on those rides, not the drivers. They are trying to get you to use them, instead of the competition. If their strategy works then they can eventually start charging more because they'll be the only rideshare in town.

digitalzombie 9 years ago | |

> It's Uber who loses money on those rides, not the drivers.

If you want to view it that way then it's both drivers and Uber that's losing money.

I do Lyft on the side over summer as a poor grad student. I only have 3 pool ride and those three the passenger didn't have to share any ride with anybody and I made less than if those ride were not pool.

You're also implying that in the long ride Uber will win if it works as if the speculative end will justify the mean.

Which, personally, I think a flaw and weird way of seeing it.

kspaans 9 years ago | | |

When Uber offers promotional discounts to first-time riders, does that discount come out of the driver's pay? I was just trying to say that what the customer pays and what the driver earns aren't always directly linked.

And you're putting words in my mouth. I didn't say the end justifies the means. I was speculating as to what Uber's goal is for subsidizing rides, rather than charging what they cost.

newjobseeker 9 years ago | | |

I always have 2 others in my Uber Pool or Lyft line. Some Uber drivers have told me they make the money through trip bonuses and not so much on the fares themselves, they get a certain bonus when they get to a certain number of trips, but I can't imagine that would make up the difference.

seanwilson 9 years ago | |

> It's Uber who loses money on those rides, not the drivers. They are trying to get you to use them, instead of the competition.

Are there not laws against predatory pricing like this?

jklein11 9 years ago | | |

IANAL and my expertise in this matter is only as deep as skimming these articles[1][2] but it seems like it would be illegal if Uber were a monopoly and cutting prices to prevent competition. Cutting prices to try to gain market share seems to be a competitive practice which benefits consumers.

1.https://www.ftc.gov/enforcement/anticompetitive-practices 2.https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

praneshp 9 years ago |

I use Lyft Line almost exclusively and they are only slightly pricier for me (vs Uber Pool. I always compare and take Lyft if it is under $2 more expensive).

CodeWriter23 9 years ago |

Are you comparing to Lyft or Lyft Line?

alextheparrot 9 years ago | |

I was about to say, I live in the SOMA and the prices were about the same between Pool and Line last I checked (Started using Lyft exclusively recently).

newjobseeker 9 years ago | |

I'm comparing Lyft Line and Uber Pool.