Uber's Guarantees

My first week driving for Uber coincided with Super Bowl 50 and I wanted to document the math behind why there was absolutely no incentive for me to drive during peak hours. In the San Francisco Bay Area, there are various guarantees for driving and for my first week, Uber guaranteed $25/hour before fees for every hour I have the app on given that I maintain >1.5 trips per hour and a 90% acceptance rate. I had a bit of free time to do some research this week so I thought I would go full-time for 35-45 hours to see how well I can do and learn the system. Perhaps it was just the time or the places I was, but the M-W were particularly slow earning days. I was pulling >2 trips/hr with a 100% acceptance rate and my cash earnings were hovering around $14/hour (!!!) That is ignoring costs, which would push the hourly rate much, much lower.

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With ~15 hours in the bank and being underpaid $10/hour lower than the guarantee, I had already "earned" $150 from the guarantee. This means that anything I earned ABOVE the $25/hour guarantee would cut into what I was already guaranteed. In other words, my incentive was only to maintain my >1.5x trips/hour, 90% acceptance rate and keep my mileage low. If I received an amazing day and received $400 over 10 hours, it would be mathematically exactly the same as receiving $0 over 10 hours since I was guaranteed the $25/hour. It might have been some of the recent price cuts but there were quite a few trips that felt particularly underpaid.

The major killers to hourly earnings is pickups or dropoffs outside of popular areas. For example, if you are 15 minutes from the closest Uber, an Uber sometimes may need to drive 7 miles to pick you up (at $0.575/mile, that is $4.02) sometimes for a $10 ride that takes another 15 minutes and 10 miles. 30 minutes, $10 and costs of $9.78. These are the rides that I have simply decided to stop accepting. If I see a ride up in the mountains or far away from a city center, I will just ignore it and let somebody else take the depreciation on their vehicle. I have received an e-mail from Uber gently urging me to accept the rides because it is "better for the system" and "nobody is better suited to pick up the rider than you when you receive a request" and essentially to be part of a team. I disagree.

As a 1099 contractor, I am fully entitled to accept whatever rides I choose on the platform, especially if they want to hold up the belief that they are a network of ridesharers and not a taxi/on-demand ride system. If Uber/Lyft truly want drivers to take every single ride that is offered them, the solution is EXTREMELY simple. Higher prices. There is no way around it. If somebody wants a ride in the boonies (or to the boonies), wants it on-demand, in a nice car, instantly, they should pay more. I speak from experience as a rider (I started riding in Chicago in March 2013). Some rides are instant, 12 mile, 15 minute rides out of the city and they can come in around $9. This feels extremely low as a consumer.

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Overall, it's not a major issue for those who use ridesharing to supplement their income or are more passive about receiving their income, but for those who depend on ridesharing for their primary source of income, it is extremely difficult to take some of these rides. I understand it is very difficult to price some of these rides, but the answer is painfully obvious to me: the money should come out of the consumer's pockets.

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