This seems like a dumb move by Uber that I wonder if they will end up retracting here soon. This new fee seems very half-baked, and I imagine it will actually hurt their brand rather than do what they think it will do. It's like this is a band-aid fix for the news flack they have been receiving lately about safety with UberX.
They seem to have so much traction in this space with drivers that I don't get why they don't charge the driver to do a background check / insurance check (as someone else in this thread mentioned). Or heck, maybe they should just be paying for these safety checks out of their own pocket. It would just add to their brand as naturally being a safe-to-use product. If a store was charging you to be helped by "safe" employees vs sketchy ones, you'd be outraged.
Based on this, assuming it's a fee that is here to stay, they will end up making a fortune from customers compared to what it "really" costs to implement the idea of safety (the checks/balances). A simple background check is roughly less than $25. I can't imagine them taking much more steps than the bare minimum. Uber will probably make their money back in a few dozen rides, then can simple reap the benefits. Plus, who knows if they are even doing these checks/balances or what they are doing. They could add this fee on, and there would still be no transparency on what they are even doing with the money to help with your safety as a customer.
This just seems like a very short sighted idea by Uber (if they actually want to help the customers/employees). I'm losing more and more respect for this company everytime I see their name mentioned in press/articles. Everything from the poor taste in aggressive sales tactics [1] to things like this. I consider this a "panicking" move by Uber, as if the once solid floor is slowly slipping away from under them.
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 $2.92 (more than before), and the driver is taking the loss.
For that to be true the average ride would have to be under 25$. (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.
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."
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.
Heh and then comes the gas surcharge and the waiting penalty and before long they have to put a sticker in the window with all these fees enumerated, and there will also be so many ubers that they'll have to put little signs on top so you can tell which one is taken and which isn't.
Or, when you get a driver that makes you fear for your life because they are spending more time paying attention to their three GPS devices instead of traffic, do you get a $1 refund for the un"safe" ride?
Where are you guys having these bad experiences? I don't use Uber much, but I have used Sidecar in SF about once a week for around two years without a single bad experience, and I would have thought Uber had an even higher standard.
Correct. I say that to prove the point that this raises more questions than it answers. Does this mean that Uber black car service isn't safe until this fee is applied there? What about Uber Taxi? Were my rides before this fee safe? Its bizarre.
Given that the black car and taxi services go through other, well, black car and taxi companies, I'd assume that they do this kind of thing themselves.
Why not just add it to the base price of the Uber ride? Still seems a little gimmicky to me.
I take uberX a very short distance on almost a daily basis. $1 more represents a 12% or 15% price increase in each of my rides. I thought the cheap short rides, was one of the best features of UberX. This will make me consider continuing to use them for these short daily trips.
Indeed, this sort of gimmick "fee" seems antithetical to Uber. The whole point of Uber is to avoid the BS associated with taxis, of which unclear pricing is one example. If they continue in this direction, why use Uber over a regular taxi?
Uber actually picks you up. Yellow Taxi in CA regularly fails to come (once left me stranded in East Palo Alto) or the taxi dispatcher will yell at you for calling the Burlingame number instead of the San Mateo number.
There is Taxi Magic, but that app is just not as good.
I would guess that this was an easier-to-market way to sell the user on an unfortunate price increase. I would imagine no one would disagree that they want a safe ride, and for Uber I am sure that indeed it will support newly discovered costs of doing business... so they might be right to sell it this way.
The fact that it was released on a Friday before an Easter Holiday weekend might support the theory that it's just simply a "bad news" price increase [1].
I agree. I'm a fan of "the price is the price," with all of the various overhead expenditures being factored into that price. There's not a line item for their app developers, nor a charge for their server hosting...
Lyft's ain't free, it just uses the legal fiction of a "suggested donation" as a fairly transparent attempt to avoid taxicab regulations in some cities.
...or a more strategic "cut prices to lock people into our service, and then up the prices". Uber cuts the prices of UberX to attract traffic away from Lyft, Sidecar, etc, and then raises prices and relies on people not having the inertia to go back to other apps/suppliers and shop around.
Right, can I opt out of that fee? There's a link to a new axe design trending on HN at the moment; how about I buy one of those and bring it with me to guarantee my own safety and opt out of that dollar fee?
Line-iteming a fee feels like it opens it up to negotiation.
Uber announced this change to all their drivers earlier this week in an email. What this article doesn't mention is that in that same email they also announced a new "Data Plan" fee for drivers. They are going to start charging Uber drivers $10 per week for use of the iPhone Uber provides you and you are required to use to be a driver for Uber.
In other words their lowering of rates was probably just a ploy and now to put them right back where they were again they stick in these extra fees on drivers and passengers. Kind of a crappy situation for all parties. Uber already takes 20% of every fare.
Article leaves out important point: they raised their commission from 5% back to 20% at the same time as the implementation of the $1 safe fee [1]. (They had dropped their commission to 5% in January with the price drop [2].)
This is a pretty big bet on their part that they've locked drivers into the Uber platform through enough volume/earnings.
As a heavy Uber user, this would have gone down a lot easier if they had just messaged it slightly differently:
We're adding safety checks into our process for UberX drivers. In order to do this, we're increasing the base cost by $1. [Click here] for an explanation of how we're going to improve your safety.
It's interesting. Obviously, it's in your best interest to depend only on commodity products, both as a business and as a consumer. If you depend on a differentiated service, one that is expensive to move to another vendor, a rational, profit-maximizing vendor is going to take advantage of that.
But, when you want to run a business? If you ever want advice from a business person, If you say that your market is at all commodity, they tell you to quit straight-out.
It bothers me, because I have a really hard time honestly selling another person a differentiated product. Obviously, it's not in your best interest to depend on a product or service you can only get from one place, so obviously, if I am trying to sell you such a product, I am asking you to act against your own best interest, and that is not easy for me.
I'm confused by your terminology. My impression of the word "renter" is that it refers to monopolies, but Uber has several very well-known competitors, at least in major cities.
Jumping in on this without knowing anything about the business model, but why not just ask all of the drivers to pay $35 (for example) one time to do a bg check / insurance check?
The higher fee to drivers is not about Uber's underlying fixed costs; a simple fee or holdback on the first commission check would suffice. The purpose of the higher fee is to make more money of off the driver's to make Uber's balance sheet look better.
Basically, it's an indication that Uber's finances are a lot weaker than their lofty valuation would suggest.
Right? I guess there would need to be some mechanism for updating them however. You don't want someone to get 'certified' and then get a record, but it be invisible.
I guess an ongoing rate is necessary for ongoing updating.
I just sent a message vocalizing my disapproval of how they are approaching this at http://support.uber.com/hc/en-us/requests/new. If you're an Uber user, make your voice heard. No point in complaining here.
What if instead, Uber offered a $2 discount for unsafe, uninsured rides? Is this logical? Of course not. Therefore, what Uber is doing seems absurd, IMO.
Uber is going to get hammered in a lot of venues shortly. In order to comply, they're going to try to pass on these "fees" that they should have been paying in the first place.
For the amount of time I spend in an Uber, it doesn't make sense to pay $1 for EVERY ride. Pennies per ride would make more sense.
If I was Uber, I would charge a $1 per year membership fee to ride UberX to take care of insurance and background checks. Based on the amount of users, that should be more than enough to cover insurance and background checks on every ride I take. Would also be nice subscriber revenue for Uber even though it will be trumped by their overall bookings number.
It seems like many of the uber/rideshare/taxi services have been in a price war lately, some with explicit price match guarantees. I wonder if we should expect to see more of these fees as a way of complicating comparison shopping.
Sounds like a PR move to me. With all the legislation attempts around the country targeting Uber and those opposed to Uber complaining about lack of oversight, lack of insurance, lack of background checks, etc. This looks to me like a "yes, we do perform background checks and verify (or provide) insurance" statement.
I don’t think Uber is trying to do this to pay for check: they are asking its users to contribute to safety. It's a branding move — confusing as many have pointed out, but fairly clear when you consider psychology/behavioural economics.
The amount is minimal, and the motive too vaguely in the right direction not to be agreed with. You can’t even not select the option. The idea is the same as adding a ‘green’/ecoLabel sticker on a product: posturing. But, rather than just ask people to agree with it, they ask them to make a financial effort, albeit minimal, to empathise with it, to adhere to the direction the company is aiming at.
How can that ride not be safe? I paid for it to be!
It makes a ton of sense when you consider how safety is perceived: it's rarely actually violent event — just non-descript feeling. “That driver was creepy.” Anyone who worked in dating website for instance had to measure how pervasive that issue is, especially among women.
To me, it sounds a lot like paying to get pink cabs — and those wouldn’t feel nearly as ‘safe’ if there weren’t more commitment than a paint job: the drivers of those cab have to display mace, an interest in self-defense.
The amount really isn't minimal when you consider it's a 8-12% surcharge on the typical UberX fare. Weren't they just doing a bunch of marketing about how they reduced their UberX fares 10% in SF?
That’s why they are not showing is as a part of a ride, but as an amount, making it something under a psychological limit (usually theorised as ‘a coffee’), like micro-payments.
Except all it takes is one bad incident with some negative publicity to spoil the perception that adding this fee ensures you'll be safe. People will ask - why were we paying this when it didn't seem to prevent "X" from happening.
Having Police patrol car around doesn’t prevent crime — but seeing them helps feel safe. Have a public message thanking tax payers for financing the cars for increased patrol also increase support for police in general.
I'm not saying it will work, either. I'm just saying Uber never split costs between User Support and DevOps — they have no reason to sort one service appart unless they was a reason to display that one in particular.
This is pure speculation, but I think the fee could be a result of this scenario: By now they've got teams of lawyers going through all common and city specific laws regarding transportation. Those teams are supposed to flag anything that opponents can use to either stop or fine the service. As a result they found in some of the cities they operate in, that the service operator rather than the driver is supposed to explicitly give money towards insurance and safety check of all vehicles they manage.
They solved the potential future issue by adding a small charge that's explicitly labeled "for insurance, safety checks, etc." With all the legal issues they run against right now, preventing potential future trouble seems to make more sense than ignoring the environment.
"they found in some of the cities they operate in, that the service operator rather than the driver is supposed to explicitly give money towards insurance and safety check of all vehicles they manage.
They solved the potential future issue by adding a small charge that's explicitly labeled "for insurance, safety checks, etc.""
Huh? Law says you need to spend money in _some_ cities, and you solve that by getting more money from _all_ your customers?
I would think you solve that issue by spending money, and ensuring they have the paperwork that proves that they did spend money on safety checks and insurance.
There's compliance - "if you sue us we will spend time countering your claims showing all the documentation" and there's this action - "hey everyone, see how we comply with pretty much everything in these and similar rules? don't even bother questioning it"
They seem to have so much traction in this space with drivers that I don't get why they don't charge the driver to do a background check / insurance check (as someone else in this thread mentioned). Or heck, maybe they should just be paying for these safety checks out of their own pocket. It would just add to their brand as naturally being a safe-to-use product. If a store was charging you to be helped by "safe" employees vs sketchy ones, you'd be outraged.
Based on this, assuming it's a fee that is here to stay, they will end up making a fortune from customers compared to what it "really" costs to implement the idea of safety (the checks/balances). A simple background check is roughly less than $25. I can't imagine them taking much more steps than the bare minimum. Uber will probably make their money back in a few dozen rides, then can simple reap the benefits. Plus, who knows if they are even doing these checks/balances or what they are doing. They could add this fee on, and there would still be no transparency on what they are even doing with the money to help with your safety as a customer.
This just seems like a very short sighted idea by Uber (if they actually want to help the customers/employees). I'm losing more and more respect for this company everytime I see their name mentioned in press/articles. Everything from the poor taste in aggressive sales tactics [1] to things like this. I consider this a "panicking" move by Uber, as if the once solid floor is slowly slipping away from under them.
[1] http://money.cnn.com/2014/01/24/technology/social/uber-gett/