Facing the winter doldrums, Uber recently announced price cuts in 100 U.S. and Canadian cities.
Citing seasonal dips in business, the company said the single most effective way to boost ridership in the winter is to cut prices for riders.
The company also announced it would implement guaranteed earnings for drivers to keep them going during the down season.
“For some cities this is the third year in a row we’ve cut prices to fight the January blues. Driver earnings in those cities continue to rise year after year,” the company said in a statement on its website. “Of course, it doesn’t always work as we had hoped. Last year, for example, earnings fell in some cities and we changed back. In Charlotte, for example, we pulled a 40 percent price cut back to 29 percent, and earnings for drivers grew by nearly 20 percent in 2015. And in two cities, including Seattle, we ended up reversing the price cuts entirely when it became obvious that prices were already low enough. Earnings have remained stable since.”
Responding to Uber’s move to drop prices, rival Lyft announced that it is also cutting fares. The company said it will drop prices in 33 cities across the country including in top markets like San Francisco, Los Angeles and Washington D.C.
“No drivers like a price change…,” Lyft explained in an email to its drivers. “…So we try to make them only when we have to. With recent price changes from the competition, we need to take action to protect ridership and your long-term earnings.”
In its notification email, Lyft emphasizes that its drivers will have the opportunity to earn more money via power bonuses, incentive programs, and an in-app tipping system — something Uber does not have. “We’ll keep doing all we can to make sure driving with Lyft is the most lucrative for you,” the email reads.
Uber said pricing in the ride-hail industry is a science and that ever city is different: different economic circumstances; different regulations; different competition.
“We’ve learned over the years that we do best when we test new things. With each new test—small or large—we learn more about the choices riders make, and how those choices impact earnings for drivers.”
Drivers in some cities responded strongly to the company’s action.
In Tampa, Florida, a group of more than 50 drivers gathered to protest the price drop.
Uber driver Larry Carpenter, 49, doesn't buy the company's argument that the drop is seasonal.
"This is Tampa, not New York or Detroit or Chicago," he said. "It's not cold like it is there. … We have more people here, more traffic, more everything during January, February, March."
Drivers also complained that there are stipulations in the guaranteed earnings of $15-20 per hour that make it difficult for them to earn those rates.
“These protests will continue as long as necessary,” said longtime driver Joshua Streeter, 41, who is on the Tampa Bay rideshare steering committee.
"We're going to protest for as long as it takes until someone from Uber does something," Streeter said. "How long it will take, I don't know. We have enough anger that we have the support of the drivers now."
He said it's "entirely possible" that the protests will continue through the month, which would include Tampa Bay's favorite pirate-themed holiday: Gasparilla. He expects surge pricing to reach 10 times the normal rate during the Jan. 30 parade.
Drivers say it will slash what they make working for Uber and expose customers to record surge pricing — particularly with Gasparilla two weeks away.
A similar protest took place in San Diego, California, where Uber has roughly 12,000 drivers and 545,000 riders. UberX drivers currently make 90 cents per mile during non-peak hours. The company, however, takes a 20 percent cut of earnings, and drivers who started after Nov. 30 are subject to Uber taking a steeper, 25 percent portion of fares.
The company evaluates its per-mile rates on a market-by-market basis and may determine to roll-back rates to $1.20 per mile in San Diego if the seasonal promotion is deemed unsuccessful. The company says that it encourages drivers’ input.
“Our Partner Support Center in San Diego is open five days a week for partners to speak one-on-one about any issues they may have,” said Christopher Ballard, general manager for Uber in San Diego. “We always welcome feedback from driver-partners here in San Diego and use their feedback to improve the partner experience."