What happens to driver earnings when promotions take a nosedive? Senior RSG contributor Sergio Avedian is all about driving smarter, not harder, and prioritizes earning as much money as he can while he’s out on the road. Below, he shares how promotions have impacted his earnings – and a disturbing trend he’s noticed that is impacting drivers right now.
After being idle for almost two years, I started driving on a very part-time basis and writing articles for The Rideshare Guy again. I had missed the writing part, not so much the driving part, and I believe in what I put out there. My work is factual, with screenshots, because it is very rare for journalists in mainstream media to undertake the task and experience what drivers go through day in and day out. Most mainstream media outlets take press releases from Uber and Lyft at face value. Not RSG!
Recently, Uber and Lyft had been complaining about a driver shortage due to the pandemic. This gave their executives the guts to pounce on the opportunity and raise fares for the passengers to the tune of 50-100%.
In the meantime, Uber and Lyft have not increased the base rates for the drivers in Los Angeles from 60/21 cents on Uber, 80/12 cents on Lyft since 2019. Of course, we as drivers are paying 50-100% higher prices for everything we utilize for rideshare driving (gas, maintenance, auto parts, etc.).
After the third-quarter earnings announcement, Uber CEO Dara Khosrowshahi told a reporter on CNBC that they had a lot of pricing power and passengers were gladly paying for the higher fares. He blamed it on inflation in general. I guess we as drivers are the only people immune to inflation since Uber and Lyft have not raised per mile/minute rates for us since 2019. Who is he kidding?
The base rates are hovering just above the allowed IRS mileage deduction. In a recent interview with Harry, the Head of Uber Mobility said “base rates are very strong.” If 60/21 cents is very strong, I wonder what would be considered weak base rates!
Things Were Going Great for Drivers – For a While
When I started driving again in late August/early September of 2021, I immediately noticed that Quests and Consecutive Ride Bonus (CRBs) were an integral part of my success. I was making $50-60 per Online and more per Active hour. These numbers were equal to 2016-2017 levels when I gave my first ride for Uber.
With certain strategies, I continued to earn way above the average driver and I was actually enjoying the work. I was a happy camper, but I have a lot of scar tissue when it comes to Uber and Lyft reducing rates and incentives once they flood the marketplace with cars. I knew the good times would not last for the drivers.
While the good times rolled, I couldn’t say no to a decent amount of cash for a few hours of work every weekend. I deployed the same strategies I had used pre-pandemic to position myself all over the busy areas of Los Angeles and took advantage of all the Quests, and CRBs.
I tried to target short to medium rides and stayed in the CRB Zones with much success. I drove only when Uber/Lyft offered me an incentive to do so, which is what encouraged me to create my new club: SHOW ME THE MONEY, I’LL DRIVE FOR YOU!
Take a look at the screenshots below.
Over $60 per Active hour on both platforms. I drove part-time and most importantly, I took advantage of all the hefty Quests and CRBs.
Over $55-60 per Active hour, I could not believe what was going on! I was making good money within all the metrics I use for profitability.
Promotions Were Key to Above Average Earnings
As I mentioned above, the driver shortage due to the pandemic was real. When I decided to drive, it was ping after ping to the point I could not turn the app off fast enough to take a break. My Utilization Rate (UR) was almost back to 2016-2017 levels. Businesses were open and people were tired of being indoors. Demand for rideshare was through the roof.
One thing jumped out to me after every shift: the importance of Promotions (Quests/ CRBs) on my hourly earnings as well as an overall percentage of my weekly totals. Promotions ranged from 40-50% and sometimes more.
The percentage of incentives on my overall income was higher if I only targeted short rides to complete as many CRBs as possible within the allotted time.
Promotions Aren’t Guaranteed
Death, taxes, and Uber and Lyft either cutting rates or reducing incentives are the only constants in life. I did expect this to take place, however, the severity of the cuts has been swift and astonishing.
When Harry interviewed Dennis Cinelli of Uber (Head of Mobility), they briefly talked about how these weekly bonuses were figured out. In as many brief words as possible, Mr. Cinelli confirmed what I knew all along. Uber has such an asymmetric information advantage on the drivers and passengers that they’ll use the data to lower these incentives the second they achieved equilibrium between supply/demand.
I highly recommend every driver to listen to this podcast as well as watch the YouTube video when Mr. Cinelli announced the upcoming changes for drivers in about 20 cities across the US.
Cinelli used the words “rebalancing”, “transparent”, and “consistency” during the interview. I have been around for six years; he can’t fool me, but for newbies that is Uber speak for another rate cut. Go watch the video and then leave a comment about what you think of these changes.
I noticed a disturbing trend right before the holidays last year. Juicy incentives were being reduced by over 70-80%, and in some cases totally eliminated. The algorithm overlords decided it was time to starve the drivers again since they had enough Ants covering every corner of Los Angeles.
The following screenshots clearly demonstrate the severity of the incentive cuts.
How are Lower Incentives Impacting My Bottom Line?
My hourly earnings took a huge hit due to the reduced or eliminated incentives. I went from $50-60 per online/active hour to a recent past weekend that produced horrible numbers. That is with a decent Sunday due to the Rams playing at home in the NFC West championship game. Without that, I would have been hard-pressed to break $25 GROSS.
Take a look at the percentage of promotions on my weekly income, it’s about 15%. That is down from almost 50% just a couple of months ago.
As much as I had enjoyed driving in 2021, I am getting that sick feeling back in the pit of my stomach. Is the party over? Are those incentives ever going to come back?
In this case, the trend is not your friend as we say on Wall Street. The party probably has ended, and we are back to fighting each other for crumbs again, but all hope is not lost.
Join the SHOW ME THE MONEY club; it is a free membership. Let’s turn the tables on Uber and Lyft by staying home (do not turn the app on). Let’s use the freedom and flexibility choice we have as a rock to hit Goliath. It is the only logical action smart drivers can take until we create another driver shortage to get paid what we truly deserve.
Drivers, have you joined the show me the money club? Are you going to sit out driving until promotions increase?
-Sergio @ RSG