What’s Up with Uber’s Upfront Pricing?

Have you noticed that Uber is taking 30 or 50 or sometimes upwards of 60% of your fare, before you even get your cut? You’re probably thinking, “Hey, I thought Uber was only supposed to take 25% of the fare. What’s up with that?” It sounds like it’s up something, but it doesn’t sound like it’s upfront.

hristian with The Rideshare Guy made a video to show what upfront pricing looks like, and why it seems like Uber is taking more than they should. Check out his video below, then read the video transcript to see the points he covers.

How big of a difference is there between what passengers pay and what drivers get?

Drivers send us examples of rides all the time where Uber took more than 60% of the fare, and the discrepancies on some of these rides are so large that it’s difficult to tell if Uber is underpaying its drivers or overcharging passengers or both. Drivers claim that upfront pricing lacks transparency and gives TNCs, like Uber and Lyft, the power to manipulate pricing in their favor.

The companies are also currently losing tons of money, and they’re looking to close that gap. After three years of consecutive price cuts and bonus cuts for drivers, it looks like they might just be doing that by taking a higher proportion of the fare without telling us.

In Uber’s credit, Uber is telling drivers how much they are taking from each fare.

Our worst examples of Upfront pricing

We had one of our biggest examples that, where we found out this was happening, was from RSG reader, Michelle. She sent us a take rate, 64.65% on a $63.09 ride. In this ride, the original fare that Uber quoted upfront was $58.09, but at the end of the day, the driver was paid $28.53 off that fare. It ended up being a 64% take rate, as opposed to 25%. Uber got 64% of that fare.

Then we have another example here where we have a rider who paid $94.26, and then the driver got paid $31.46. What? That’s three to one. That’s insane. That’s a take rate of 66.62% of this fare. That’s a lot. To prove that, this article came out in January ’15, so maybe it’s not happening anymore, but let’s take a look here on Reddit today, and Uber drivers, our Uber drivers, we see that our buddy here posts that rider payment was $104.85 from the airport, and he only got paid around $31.80, two to one. Is Uber ripping off the driver or the passenger, because supposedly, very smart engineers are figuring out the approximation of what it would be to quote the fair upfront. This is off by a lot, by a factor of three. That’s bad.

Uber sometimes loses from Upfront Pricing too

Anyways, back to the blog. That’s a pretty big difference, and we see this a lot. Now, to be fair, a lot of times, Uber loses on these rides or they don’t get that 25% commission. Let’s take a look at an example of that real fast. We might be just stressing about the worst rides. Here’s an example, though, where the rider paid $34.02, and Uber only got $0.80 cents out of that. The driver got the rest. It’s kind of back and forth. It’s not always exactly 25%. A lot of times, there’s outliers.

Where’s the transparency? Nobody knows how Upfront Pricing works

There’s a lot going on here with how it’s calculating it, but I think the biggest problem with upfront pricing, in general, is there just seems to be a lack of transparency.

We don’t know how Uber and Lyft are calculating these guesses, and these seem to be so far off sometimes that it really makes us wonder if it’s in good faith or good cause or if it’s just to make a machine that maximizes charging passengers as much as they can while it maximizes paying or minimizes the amount that they can pay drivers. I think it’s a really big problem with upfront pricing, and that’s what a lot of drivers feel is really bad about it.

What’s the solution to Upfront Pricing?

We see all these rates where Uber takes or all these examples where Uber takes upwards of 40%, which is terrible. Why don’t we just cap it at 40% or so, and then that’s that. Uber can still do their upfront pricing scheme.

Some people say it’s all in our contract and we agreed to it, and that’s sure, but it’s like when people say, “It’s all in your contract. If you don’t like it, then quit.” Some people can’t just quit and go get a job. It’s just the way it is. It’s giving companies a blank check and an excuse to maybe not work with their contractors. You have to hold companies accountable or at least put some pressure on them to do the right thing, and if you’re not doing that, then you’re just a rollover. You can sit there and say, “If you don’t like it, leave.” You’re just letting them do what they were doing beforehand.

I’m Christian with The Rideshare Guy. Don’t forget to like, comment, share, and subscribe to our YouTube channel to learn more about the intricacies of driving for Uber, Lyft, rideshare, and everything in between. Until next time, keep your tires on the asphalt and your hands on the wheel.