California drivers received big news this afternoon: Uber is removing the ‘set your own price’ feature that enabled drivers to set their own fare multiplier.
Quick summary:
- Uber is removing the ‘set your own price’ fare multiplier and reinstating the upfront pricing feature for passengers
- Why? Uber says driver availability for passengers has been ‘unreliable’
- These features were rolled out due to AB5 and had been popular among drivers
- For drivers outside of California, this affects you too! Currently, some states and the federal government are looking into an iteration of AB5 nationwide. Uber, Lyft and other gig companies would prefer a version of Proposition 22 instead. The battle is likely coming to your state eventually!
The fare multiplier that allowed California drivers to set their own rates rolled out in January 2020 as a response to AB5. While Uber says only around 40% of drivers used this feature since its launch, it still was a popular feature for many drivers, particularly for those who were willing to wait to get the fares they wanted.
As a driver we interviewed in Palm Springs stated, “I normally set it at 1.8X when there are plenty of other drivers around to keep up with the competition, but I set it a 3X when no one is there. I’ve even played around with setting it 5X just to see the rate but know I probably won’t get a trip especially if there are other drivers around as well.”
Another driver that Harry spoke with recently said “he only takes rides above 2x right now and is averaging around $40-50/hr driving in San Diego right now with all of the increased demand, lack of drivers and weekly incentives”. (We verified his pay statement).
In addition to removing the set your own price feature, Uber is also bringing back upfront pricing for riders.
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Watch: Uber Kills Another Driver Perk!
Uber Removes ‘Set Your Own Price’ Feature, Brings Back Upfront Pricing
On April 8, 2021, Uber announced changes to two main app features for California drivers and passengers:
- Eliminating drivers setting their own price
- Restoring riders seeing upfront prices
In addition to these changes, Uber is also making changes to surge and fees – you can read the full breakdown here or view the changes in the table below:
Many of these positive app features in California came to be because of fears of AB5 – Uber, Lyft and other gig companies did not want drivers to become employees, and so they began a campaign of rolling out features drivers had been asking for, like the ability to set their own prices and see passenger destinations.
When we first covered these announcements in January 2020, we even noted AB5’s positive impact on these new features.
These two features were things drivers had always been asking for, so it’s unfortunate that California drivers got them only to have them taken away.
Why is Uber Removing and Reinstating Certain Features?
Worried about legislation like AB5, Uber, Lyft and other gig companies supported Proposition 22 (read all about Proposition 22 here). However, in 2020, Proposition 22 passed in California.
Proposition 22, which came as a repudiation of AB5, began to take effect in December 2020, and since then, we’ve started to see some changes. One of the first features to change was an immensely popular one, the ability to see passenger drop off destinations.
Watch here: Uber Has Stopped Showing Drivers The Drop off Destination!?
Why is Uber making these changes? According to Uber, passengers aren’t getting rides. This is partially because they don’t want to pay the higher prices drivers are charging with the set your own price feature.
It’s also partially due to the fact we are still in a pandemic and some drivers are staying offline because they’re unable to get the vaccine or they’re receiving more in unemployment. This shortage of drivers (happening nationwide) is causing Uber, Lyft and other companies to offer big incentives and guaranteed earnings to get drivers back on the road.
Watch: Uber Is Spending $250 Million To Get Drivers Back On The Road!
So one factor for this change is cheap passengers, but also Uber doesn’t want to lose any revenue by lowering passenger fares while allowing drivers to keep their higher earnings.
The solution: Uber is removing the set your own price feature for drivers and allowing riders to see upfront pricing.
What does this have to do with Prop 22? As mentioned above, Proposition 22 was a rebuke of AB5. Uber, Lyft and other companies did not want to see drivers become employees. They rolled out some popular driver features, heavily invested in ‘Yes on Prop 22’, and now we’re beginning to see the effects of Prop 22 for drivers in California.
What Can California Drivers Do
Right now, Uber and Lyft are desperate for drivers. Take advantage of the current bonuses, surges, guaranteed earnings and more in your app while it lasts.
Drivers can still see passengers drop off destinations (although only a certain number in a certain amount of time.) You can still choose the rides that work best for you and where you want to go, you just won’t be able to set a fare multiplier to make all of your rides worth it.
As far as upfront pricing, as we found in our tests on upfront pricing, the routes usually assume a longer ride plus a driver who doesn’t strategize well. We found that in general, drivers are compensated well as long as they drive smart (know your city and its roads!) It’s really the fare multiplier that some drivers will miss the most!
Update April 2021
Drivers are reacting to the multiplier being taken away – and they are not happy about it! This conversation about Uber in California quickly made it clear that losing the multiplier has made driving for Uber much less appealing than before.
As one driver stated:
I can live without setting my own prices, but I’m not gonna sign on AT ALL in an area that doesn’t have bonuses going on. At least in the past, there was always a chance you’d get a ride that pays 3x-5x. Now, we sign on to get a ride that just pays normal prices, while we know Uber is pocketing probably 50% of the ride again.
If Uber wants more drivers to sign on and shuttle passengers around, removing the multiplier was a really bad way to ‘encourage’ drivers to get back on the road.
Wondering what you can do about these changes? Most drivers are saying delivery driving is paying a lot more than rideshare. Sign up for the best food delivery services out there, like Instacart and DoorDash.
Takeaways
It should almost go without saying, but passengers want rides and drivers want to provide rides. Drivers don’t sign up for Uber to wait around and never get a ride.
However, drivers want to be compensated fairly for driving and passengers want the cheapest ride possible. There’s a fundamental divide there, and instead of Uber making up the difference, they’re taking more from drivers.
It’s tricky, because listen to what happened when Vikesh Chandrashekar from Fairshare started his own rideshare company in order to pay drivers more and provide high-quality customer service: basically, it failed. Fairshare failed for several reasons, but one was customer demand and all the expenses that come with running a rideshare company.
Uber needs to make money – it has shareholders now! Drivers need to make money – this is how 45% pay their bills as full-time drivers, per our Uber driver survey.
What’s missing? Passengers paying more. Why shouldn’t passengers pay more? Uber (and Lyft) are here for convenience, and customers already pay more for the convenience of receiving an Instacart order in two hours or less (plus many, many other conveniences that charge a premium, like faster shipping.)
Then again, if Uber raised prices on passengers, Lyft might not, and Uber would lose market share. Or it could lose passengers entirely, as it’s finding out right now in California (hence this news), and that hurts its bottom line.
Either way, this battle isn’t limited to California. The PRO Act is a federal version of AB5, and Uber and Lyft are already in several states fighting against versions of AB5 or preventing it entirely. The debate will eventually affect every state.
What do you think the answer is? Do you think drivers should have become employees, as was the track with AB5? Or do you think Prop 22 was the best answer? Would you like to see a version of Prop 22 or AB5 roll out in your state?
-Melissa @ RSG
