When rideshare companies adjust rates, riders and drivers lose.

In the last 5 years, I have watched both base rates and surge pricing for drivers drop less and less. In Houston for example, the payout when I signed up was $1.48/mi. Now it is as low as 44 cents for Lyft Express drivers in Houston. (Currently, my rate is 64 cents as I am grandfathered in and get a whopping 4 cents a mile more than someone who signed up after me, using their own car.)

Before I get into it, even though the rates have dropped over the years, I am still an active driver. Why? I enjoy doing it, and it the flexibility of it really works with my schedule so I can earn some extra cash. While I may not rely on Uber and Lyft to pay bills, I do rely on Uber and Lyft for extra spending cash. Part time or full time, we all feel the pinch of a rate cut. A lot of drivers have told me to quit rather than complain. Is that fair? I should be forced to quit because I don’t like the new rates? I laugh, knowing that a rate cut is in their near future.

Now, here’s the deal: No matter how Uber and Lyft spin their rate cut reasons, I have made less and less over time. I have a goal of $500 extra to make a week and I still hit it, but I am putting in double, sometimes triple the hours as I would of before. There are times I decide to pull over and take a nap just to make sure I meet my goals for the week, a couple of these times I have been met by an officer checking on me to make sure I was still alive. I was very lucky it was a officer. The first time, I was in a parking lot and I fell asleep for almost 20 minutes when the officer came knocking on my window. I literally screamed and saw the officer reach for his weapon. Fortunately nothing came of it, but it is not safe. The rideshare companies need to understand that each driver, rather full time or part time need to make their goals. For every driver that pulls over and takes a cat nap, there is probably one that decides to pound back another energy drink, trying to keep their eyes open. Road hypnotism is real and drivers have fallen asleep. This is why you are limited to a 12 hour day on Uber, 14 hours on Lyft before the apps sign you out for a six hour break. That makes sense, but it is not a catch all remedy. Getting around these breaks and still being able to drive is easy. Example: Uber logs you out at 12 hours, but you still have 8 hours left on Lyft because you did not sign into Lyft when you decided to Uber that day. (or maybe you logged out of Lyft while on Uber rides.) This mean, you can wait out Uber’s 6 hours while doing Lyft rides and vice versa. You can literally work for an unlimited amount of time. The hardest part is staying awake. At the same time, you are not always on a ride, so you can pull over and take cat naps, or go to the airport to take a longer nap as you wait in the queue. Over a weekend, you can rack up full time hours. (I know this from experience.) But why should you be forced to do this? Because Uber and Lyft want to lower their rates? You can simply not drive, but how are your bills going to be paid? Where is that extra spending money come from? (the reason why you do a side gig)

What happens when you become tired and all your body wants to do is sleep? Yes eventually your body will shut down, but not before you are a grouchy, miserable person that your riders will see and have to deal with. This in turn creates a negative user experience, one that can seriously turn riders away from rideshare. It sucks when you go to a store to buy something and the person behind the counter is the angriest, rudest person you have ever dealt with right? The same thing with drivers, so yes the riders do lose as well.

At the end of the day, both Uber and Lyft are way cheaper than a taxi and provide a better service (assuming the driver is not too tired to drive). The craziest part? When you offer a better service, you do not need to be the cheapest. There is no reason for a price war, because you will gain customer loyalty. In fact, people are more than willing to pay a premium for this. Take surge pricing for example: Riders pay up to 10x the amount of what their ride would of been. They still pay it! All they had to do really was wait a little bit (typically prices go back to normal in Houston after half an hour) but they would rather pay more, with the expectation they are going to get a safe, clean ride, with a happy driver. (I know I am happy when I get a good surge ride.)

Back in the good days when there UberX in Houston had a $1.48 payout (2014), riders were happy that it was such a better experience than a taxi and a whole lot less money. I remember (I wish I had saved them) Uber had a marketing campaign that stated something like: “UberX is 45% cheaper than a Houston Yellow Cab!” Everyone was happy then. Drivers felt were making great money for simply driving their cars, Uber grew in popularity and riders felt they were not getting ripped off by a taxi.

Then comes the rate cuts. (Every rate cut is the same ole marketing routine from both Uber and Lyft.) – “Beat the winter slump, the summer slump etc. We are slashing fares by 20% so you can get more riders!” It is true right? We now HAVE to pick up more riders to make the same amount as before. 20% more in fact. Now, there is not all of a sudden a mass influx of riders because they may be saving $2, and really that is not enough for even me to say “Oh yea, I should take an Uber to the grocery store for the hell of it.” As a driver, I truly feel my time was better used in 2014. I literally worked Thursday, Friday and Saturday nights and met my $500 quota easily, within 20 hours of driving. I never needed a coffee or energy drink. (now I drink a couple a shift as I try to max out my hours.) That stuff costs money.. one energy drink is equal to one min. fare ride. With fares about 60% less than what they were, I have to drive 60% more. I need 60% more riders. I put on 60% (+) more miles on my car. That instantly translates to 60% more wear and tear. 60% more repairs. 60% more in gas.

Let’s also point out the fact that this post was made on behalf of LinkedIn. In partnership with therideshareguy, Harry Campbell, they wanted to know if price adjustments affected drivers. The bottom line, is yes they do! Why do you think Harry Campbell quit rideshare? He may do a couple rides a week, but he is not doing it full time like he was when he quit his plush corporate job. Sure he made a successful website, which was likely his goal from Day 1, but the fact that he has to ask that question shows how out of tune with drivers he really is.

When surge pricing kicks in, it is a awesome feeling. Here we are getting paid up to 10x the amount of what we are used to. Without surge pricing, I do not go to large events like sports games, and concerts. It is simply not worth trying to find your rider, dealing with all the drunks on the road, traffic, and other rideshare drivers cutting in front of you trying to make a couple dollars. At the same time I understand it is not sustainable. Riders would rather end up driving then getting charged $300 for a $30 ride home. That endangers everyone. What needs to be addressed is the base rate. If we really wanted to pay fair, we can match what the taxis are charging, at least at the large events and bar closing times. After all, taxi prices are set by the city, typically after a in depth study from a 3rd party, that takes into account everything. From cost of the lease, gas and other expenses and of course the driver earning a livable wage. So it’s not like we are asking for a whole lot, and the riders would very much rather be in a Uber or Lyft instead of a cab. To see these cities like Las Vegas paying express drivers (who very much have to pay close to what a taxi pays for their lease) .24 cents a mile is ridiculous. Meanwhile, the riders are basically paying the same amount as they did 2, 3 years ago. Does Lyft give you a discount when you get a Lyft Express Driver? No. But they are paying those drivers substantially less. In Houston, express drivers make $160 less for every 1,000 miles they drive compared to a driver with their own vehicle. If you try to compare this to a trucking company, the owner operator pays way more for their truck. A Lyft Express driver pays $250 a week out of pocket, compared to a regular owner-operator that may pay $300 a month on a used car. It makes no sense and definitely not dollars. But these drivers are usually your full timers, so now they have to stay up as much as possible to pay their bills. They do not get a chance to rest.

Fun Fact: Lyft justified lowering rates for express drivers to cover insurance costs. I am willing to bet a lot of these accidents were fatigued related and 100% preventable.


tl;dr? Rate adjustments do not just affect drivers. They affect riders as well. Long term, even Uber and Lyft lose as they lose great drivers and riders that go away with them.