Do you ever wonder why Uber and Lyft keep reducing surges, bonuses, and driver pay? I do.
As I read comments on The Rideshare Guy YouTube channel, I see there is a lot of anger about this topic. Drivers want to drive, and they want to get paid fairly.
Now the issue is, what do you consider to be fair?
When I started driving in 2015, I was paid 80% of the passenger’s fee. That is what I define as fare. Little did I know then that Uber and Lyft would change the game’s rules.
In this article, I will explain how Uber and Lyft’s inability to turn a profit has devastated driver pay. I will also suggest some solid strategies you can incorporate to make as much money as possible so you are not feeling like you are on the bottom of the gig heap.
The first drivers for Uber were paid 90% of the passenger’s fare. If the passenger paid $20, the driver would get $18. At the time, this seemed fair. The driver provides the car, the gasoline, the driving, the time, and the convivial conversation.
All Uber provided was the lead, the notification that the passenger had paid for the ride and wanted the ride from a specific pick-up location to a specific destination.
Essentially, Uber provides a taxi service. However, instead of paying a dispatcher to route the rides, an app on your phone does the same thing.
Less expense should lead to a more efficient system and lower fares.
Uber and Lyft Are Still Not Profitable
But it did not work out that way. Sure, Uber and now Lyft are both very popular.
Rideshare is now an indispensable part of life for millions of people across the globe. Yet, Uber and Lyft are not close to being profitable.
According to the Business Model Analyst:
Despite its popularity, Uber has been unable to turn a profit on a net basis. In 2022, Uber reported a profit on an adjusted EBITDA basis, meaning it had generated positive earnings before interest, taxes, depreciation, and amortization. However, the company still lost a large amount of money.
While Uber has seen tremendous growth over the past decade, the company has yet to make a profit. However, this does not mean that Uber is not generating revenue.
In fact, the company reported over $11 billion in revenue in 2020 and went on to reach over $17 billion in 2021. While Uber has yet to break even, its enormous revenue indicates that the company is well on its way to profitability.
Impact To Drivers
Since Uber and Lyft are not profitable, they continue looking for ways to increase revenue and reduce expenses.
We, the drivers, are an expense. Therefore, the less Uber and Lyft pay the drivers, the sooner they can achieve a position of profitability.
Uber and Lyft are both now public companies, so they are beholden to their shareholders.
Profitability in our capitalist country is the holy grail of corporate America. No matter how much drivers complain, strike, or make new laws, that will all pale compared to turning a profit.
Uber and Lyft will do everything possible to keep our pay as low as possible.
Black Box Payouts
With the introduction of upfront pricing, drivers cannot know how their pay compares to other drivers.
It is also very tedious to go through the process to see how much your passenger paid relative to your pay.
As it stands right now, two drivers could be offered the exact same ride, and the drivers will be paid differently.
If the algorithm determines you are willing to accept less profitable rides, you will get less profitable rides. We don’t know exactly how the fares are determined.
All the data goes into the “black box,” and a fare is offered to you for a ride. You can either accept it or decline it. That is the only true power you have as a driver. Accept or Decline?
Since I started driving, I heard that Uber and then Lyft were committed to self-driving cars. Then, for sure, these rideshare titans would be profitable.
However, that has not become as easy as first thought. Regulatory hurdles, safety concerns, cost, and poor public relations (imagine the backlash of eliminating every rideshare driver job!).
Uber and Lyft are stuck with us, at least for the foreseeable future.
What Can You Do?
The one thing you won’t ever be able to do is convince Uber and Lyft to pay you more, getting upset about it won’t change anything.
Focus on what you have power over ride selection, bonuses, and tips:
- Ride Selection: First, you can learn to be more selective about your rides, some rides pay you more per hour than other rides, so turn down the less profitable rides.
- Bonuses: The next thing you can do is schedule your driving time around bonuses. Use the bonuses to bolster your hourly earnings.
- Tips: Finally, do a good job with your passengers and earn their tips. Provide a clean car that smells fresh, play peaceful music at a low volume, smile, talk if that is what the passenger wants. You can do these things to turn the odds in your favor.
In this article, I have shown you the futility of hoping Uber and Lyft will pay you more.
They are focused on profitability, and we are an expense that they will work day and night to reduce. This is the information we have to accept.
However, there are things we can do. I think the best thing we can do is come to a place of acceptance so that we are not going crazy with anger and frustration.
Most of us love driving, and we love our passengers, we don’t have to love Uber and Lyft. The best solution is to put them out of your mind.
If anything, we can try to be grateful for the opportunity. It may not be the opportunity of 2015, but we still get to do something we love. Be safe out there.