Last week, Uber announced that they would be raising the booking fee for a second time this year. The first time around, the increase amounts ranged from $0.20 to $0.35, depending on the city, and it meant Uber was going to take a larger commission from each ride. This time around, the booking fee is going up by $0.15 – $0.50 in non POOL cities and by $0.20-$0.30 in POOL cities on X and POOL.
Uber advertises a 25% commission to new drivers but when you include the booking fee, their median commission is actually closer to 40%. Now it will be even higher. Uber made this announcement to all drivers last week via email and in the driver/rider apps. Uber says the increase is due to safety, operational and regulatory costs. And although drivers will still get paid the same amounts, it does mean that passengers will pay more for the same ride and Uber will keep a larger cut.
Uber Increases Their Booking Fees Nationwide
In the announcement last week, Uber wrote:
In the US the booking fee will go up by $0.15 – $0.50 in non POOL cities and by $0.20-$0.30 in POOL cities on X and POOL. The booking fee will go up $0.50 on Select and XL in all cities.
Understandably, drivers are not happy about this. As a reminder, the booking fee used to be only $1 when it was introduced in early 2014 (as a “safe rides” fee) and it has now risen to about $2.00 in most markets.
While it depends on which city you drive in, some RSG readers have already reached out to us to provide their perspective on the booking fee increase in their cities. Reader Tom noted that in Charleston, South Carolina, “the Booking Fee is increasing by $0.40 on X and XL, and by $0.50 on Premium (equivalent to SELECT). This, after a $.35 increase just a few weeks / months / whatever ago.”
Alfred from Cincinnati also pointed out, Uber’s booking fees “will increase… $0.35 for UberX and $0.50 for UberSELECT and XL… they just increased $0.30 a couple of months ago from $1.65.” He summarizes, “on a short trip, Uber will be making more than the driver [who is doing all the work] makes.”
Drivers have noticed that this booking fee is another way Uber is increasing its overall take from each fare and as many have pointed out, Uber just increased booking fees a few months ago. My biggest problem with a booking fee increase is that it only benefits Uber, a rate increase would benefit both Uber and drivers. If Uber wanted 180 days of change, maybe they shouldn’t have implemented a booking fee increase so soon?
Lyft Follows Suit 3 Days Later
Shortly after Uber announced its booking fee increase, Lyft announced their own increase of almost the exact same amount. Here’s the e-mail they sent to drivers in San Francisco:
Why The Booking Fee Is Important To Drivers
This booking fee allows Uber and Lyft to effectively give themselves a raise, contradicting past rhetoric that said lower prices means increased demand. And unfortunately, drivers should expect to see more of this behavior as Uber and Lyft try to become profitable. For what it is worth, the fee increase will be paid by passengers, not drivers.
So what does this mean for our pay? It means that drivers will get paid the same but you’ll want to come up with your own strategies to ‘capture more of the fare’. This means taking advantage of Upfront Pricing, using apps like Mystro to hop on and off platforms, and finding new ways to diversify your income with delivery. It also means not driving more than you have to, and using mileage tracking apps to make sure you’re writing off everything you can (legally) at tax time.
We reached out to Uber and Lyft for comment on the booking fee increase and received this response from an Uber spokesperson: “We made the decision to increase the booking fee after a regular review of our regulatory, safety, operational and other business costs. It’s not a decision we made lightly, and we remain 100% committed to improving the driver experience as part of 180 days of change.”
A Lyft spokesperson declined to comment but did refer to the Lyft Line higher earnings announcement for more information.
Drivers, have you noticed the new booking fees/changes to Lyft’s fees for passengers? Have your passengers noticed or commented?
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-Christian @ RSG