Uber increased the booking fee recently, and if history is any indicator, they will increase it some time again in the future. Our contributor Jonathan researched the booking fee and made a video that explains what the booking fee is and what increases mean for drivers.
Take a look at the video, and read the transcript below if you prefer to read.
Uber booking fee basics
The booking fee used to be called the safety fee, but these days it’s called the booking fee. Uber just raised it by about 20 to 35 cents, depending on where you live. It’s typically between $1.75 and $1.95 and it’s not part of your earnings as a driver. It’s a fee that’s charged directly to passengers and it goes directly to Uber, although it does show up on your tax return. It covers safety initiatives like driver background checks and other operational costs for Uber.
Get advanced tactics and earn more! Maximum Ridesharing Profits has my top tips for earning more money. Click here to enroll.
How booking fee increases impact us
Why did they change this fee and why are drivers upset about it? They changed it because Uber likes to make more money and that extra little 20 cents means a lot when they get it on every single ride that they do. It doesn’t impact the driver’s bottom line. We still make the same amount of money, regardless of what Uber is charging for this booking fee.
They haven’t changed the fare rates in this update and they haven’t changed their commission percentage. But they have changed their average effective commission. Now, why isn’t this commission set? It’s not set because they’re taking this booking fee out of every fare. If the passenger is paying a certain amount, and a certain amount goes to the driver and a certain amount goes to Uber, Uber has just tacked on a little extra to what the passenger is paying directly to Uber.
Our Top Tips for Drivers:
Although this doesn’t change what the driver is earning, it does change how much percentage of what the passenger is paying that Uber keeps. More booking fees means more money for Uber, both in general and as a percentage of driver earnings.
Booking fee increases are a pay raise for Uber and a pay cut for drivers
Back in 2016, Harry put together this infographic, showing the average commission on 37 different rides in San Francisco. With the new booking fee, that average goes from 39% to about 40.4%. That’s not a huge increase but it does represent about a 3.5% raise for Uber. Now, that may not seem like a huge deal, but it doesn’t jive with what Uber’s been telling us drivers over and over, that higher fares equals less riders and that lower fares equals more riders. Every time they’re asked to raise the rates, every time they hear that from drivers, they always come back with this response that argues that if the fares are lower, you’ll get more riders and make more money.
Related: How to track your earnings with an in-depth spreadsheet
With this booking fee increase, they’ve raised the fares but they’re not giving any of the payout or the benefit of that to their drivers. They’re just keeping it all as part of that booking fee. This is pretty par for the course for Uber. It’s not exactly a surprise that they’re putting themselves ahead of their drivers here. It is strange to see them contradicting themselves so clearly but I don’t think it really comes as a surprise to a lot of us.
Uber is still a good opportunity for people to make money in a flexible setting, where they don’t have set hours. It is just a little disappointing though to see them not raising rates for drivers, only raising rates for themselves. I can’t say it’s too much of a surprise for anyone.
There’s always Lyft, too, if you’re looking for another rideshare company. Of course, a lot of drivers do Lyft and Uber at the same time, so that can be a good way to make some extra money, too.
Thanks for watching. Let us know your thoughts on the booking fee below. Don’t forget to like and subscribe. We’ll see you next time. Drive safely.
Ready to Maximize Your Ridesharing Profits?
Maximum Ridesharing Profits is The Rideshare Guy's online video course. Enroll to learn how rideshare veterans earn more, spend less, and treat rideshare driving like a real business.