Despite their attempts at creating an autonomous vehicle fleet, Uber and Lyft still need drivers on the streets. Legislation like AB5 makes them nervous, as it makes some drivers as well, but could the answer to improving driver satisfaction be in encouraging the return of more professional, long-time drivers with bigger bonuses and incentives? Senior RSG contributor Jay Cradeur shares a strategy Uber has recently deployed to bring veteran drivers back to the fold.
If you are a veteran or long-time driver who has not been driving much lately for Uber, you may have received a bonus offer designed to lure you back into the Uber fold. It is no secret that over half of all drivers who start driving for Uber and Lyft end up quitting within the first six months. That means there are a ton of ex-drivers out there.
In addition to attracting brand new drivers to Uber with an earnings guarantee, Uber is also attempting to attract veteran drivers with a similar approach offering a guarantee. Let’s dive into the offer and see if it is worth your time and attention.
Uber Bonus vs Guarantee
It is important that you understand the difference between a bonus and guarantee. Back when I started in December 2015, both Uber and Lyft offered a new driver bonus. For example, you could go out and drive and complete 100 trips and earn a $500 bonus.
Life was simpler back then. A bonus was clean and simple. Drive, hit your number, and get a nice bonus on top of your earnings. However, a few years later, Uber and Lyft eliminated the bonus and began to offer instead, a guarantee to new drivers.
Here is Uber’s current offering in San Francisco for a new driver:
Uber is guaranteeing $525 if a driver completes 100 trips in the first 90 days. This is different than a bonus. If you go out and complete 100 trips and earn $600, then you will not earn any additional revenue.
In this example, you earned more than the guarantee and therefore you are entitled to zilch. When you evaluate this offer, dividing $525 by 100, we can calculate that Uber is guaranteeing $5.25 per ride. This is not much, and I doubt many drivers earn any additional payments from this program. Even if a driver completed 100 rides at $4 per ride and earned $400, the bonus would only be $125 ($525 – $400).
But that being said, if you’re considering signing up with Uber, it’s a better deal to sign up with an earnings guarantee than without one.
Here is Lyft’s current sign up bonus in San Francisco:
This offer is better in terms of earnings per ride. $2,100 divided by 235 rides is $ $8.94 per ride. However, a driver must complete 235 rides in 4 weeks. That is about 60 rides per week or 4 days at 15 rides each. If you are not a full time driver, this will be a challenging number of rides to reach.
If you’re considering signing up with Lyft, much like with Uber, it’s a better deal to sign up with an earnings guarantee than without one.
Hey You Veteran Drivers!
Now Uber is trying this same strategy for veteran drivers, especially drivers who have not driven for a while. But not all drivers are getting a guarantee offer. I have not driven seriously for Uber in a long time, and I did not get any such offer.
It is difficult to understand Uber’s algorithm in this regard. Here is an Uber offer for one of our Los Angeles readers:
And here is an offer from a Seattle reader:
And we also have an offer from a San Francisco reader:
Analyzing The Numbers
Let’s look at the offer in Seattle and San Francisco. Uber is offering a $600 guarantee if you complete 50 rides. Dividing $600 by 50, you would be guaranteed $12.00 per ride.
The number we are most interested in is the difference between what a driver could earn and the guarantee figure. If I could complete 50 trips at $6.00 per ride, thereby earning $300, then my bonus would be $300 ($600 – $300).
For a comparison of average per ride earnings, let’s look at my normal driving statistics:
If I only take my ride earnings of $964.12 and divide that by the number of rides (82), my per ride average earnings before all bonuses are $ 11.76 per ride. I would have to dramatically change my driving style in order to get my per ride earnings to $6.00 per ride. And even if I could do that, I would only earn a $300 bonus.
The Short Ride Strategy
Our RSG team wrote an article about the best ways to generate short trips so that you can rack up your 50 trips in no time and also earn a bit of bonus money. The approach is to only accept Uber Pool rides.
Uber Pool rides are usually shorter trips, and you can get multiple rides during each trip. For example, you may take 3 passengers on a single trip and earn $12. Since you have 3 passengers, the per-trip earnings figure is $4 ($12 / 3).
Continuing with this example, in addition to the $12, you would also be guaranteed another $24 ($12 per ride less the $3 earned is $8 for 3 trips so $8 x 3 = $24) in guarantee funds, for a total of $36 ($12 earned plus $24 in guarantee funds). That’s not bad if you could consistently get Uber Pool rides that were a short distance!
Another suggestion is to focus your driving around an area where trips are normally short. For example, when I need to get my trip numbers up for a bonus, I can reliably go to UC Berkeley and get a whole bunch of very short rides, mostly taking students to class or driving them to their dorms. It is possible to lower your per ride earnings, but it will take some work and some focus.
The other factor with this approach is the amount of time you will have to wait for an Uber Pool ping. I have not done an analysis on this, but I would say only one out of four pings is an Uber Pool or Lyft Shared. They are far less common than a normal Uber X or standard Lyft ride. How much time would you spend waiting? Is this worth your time? That is up to you.
Key Takeaways on the New Guaranteed Bonus for Long-Time Drivers
This is a sound strategy for Uber. They have an immense pool of former drivers who are trained and have proven to have access to a vehicle. For many of them, a good offer will lure them back on the road to make a quick paycheck. And it could be telling of a larger phenomenon with Uber and its driver workforce – are they finally running out of drivers?
In my opinion, these guarantee offers though are not enough to do the job. It is difficult to work the rides to lower your per trip earnings so that you can earn a little bit extra on each ride. However, your situation may be different.
I feel the guarantee should be at least $15 to $20 per ride to entice most drivers. Guarantee me $750 or $1,000 to do 50 trips and then I would have something to seriously consider. Until then, I will continue driving for Lyft. Be safe out there.
Drivers, have you received one of these guarantees enticing you back to drive for Uber? How much were you offered, and what city are you in? Let us know in the comments below.
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-Jay @ RSG