The New Uber Surge Pricing. What's Changing About the Surge and Your Earnings
The new Uber surge pricing, aka the "Pennysurge" is now in effect in six markets. What will these changes mean for your earnings? Will it be the crushing blow to Uber that many predict? And, the thing most drivers are concerned about, how will it affect their earnings?
We have had the new uber surge pricing here in Cincinnati for a few weeks now and drivers have had some time to get used to it. A quick glance at any Facebook Group, Twitter feed, or YouTube channel will illustrate the great anger that drivers have toward the new Uber surge pricing. Protests have been held here in Cincinnati and other markets are planning to do the same.
In this post I'll discuss my experiences with the new uber surge pricing. There's some good, some bad, and a bit of an ugly truth to be told. The ride data is from my own rides and does not include any from other drivers or riders that were posted on social media. My goal was to have an unbiased set of rides and what is posted on Facebook and Twitter tends to be skewed one way or the other with uber either taking a huge percentage of the fare or losing money.
Sticky surge, note my location and the surge amount.
Sticky surge, note that I moved and the surge increased
The Good
Even though you wouldn't believe it from social media posts, there are some good things about the new Uber surge. The surge is now "sticky" in that you can attach yourself to a surge amount that go towards your next ride. There are various ways to attach or stick yourself to a surge and ways to become unstuck.
The "Sticky Surge"
One is location based. You can drive through a surge area and the highest amount on your route will become "stuck" to you for your next ride. So if you get a request from a lower surge area or an area with no surge at all, the higher amount will "stick" with you. If you cancel for "pure reasons" like "rider isn't here" after 5 minutes the original surge amount will be "stuck" to you for your next ride. These are all great ways to maximize the number of surge rides you can take. A 3:00 AM cancellation on a high surge sucks since you only walk away with the cancellation fee, now you can stay online for another ride and keep that high surge amount even if the surge has entirely dissipated.
You become "unstuck" by going offline (obviously), cancelling for an impure reason, or declining a request. Many drivers think that this means if they cancel or decline a ride they won't receive a surge on their next ride. Not true. Only if the surge has dissipated, if it has not you will become stuck to the amount at your location. So if you are in a surge zone, feel free to decline as many as you want unless you start to think you won't get a surge ride nearby.
The Bad
Many drivers might find everything about the new surge bad, and there are a lot more than will be discussed here. However, I'll only discuss three problems that seem to have got the most attention already.
Dollar, Dollar, Bill Y'all
First and foremost is the change to dollar amounts instead of the multipliers. This is the change that has drivers most upset. So far in Cincinnati, I've heard about or seen amounts ranging from as low as $1.00 to the high teens and low 20s. The dollar amounts represent the "minimum" surge amount added to the next ride.
Many drivers think that this removes any incentive for long rides. If you pick up a rider on a +$12.00 surge, depending on time and distance of the ride, you may have earned more with the old 2.5x surge. Uber, however, is still charging the rider based on the old surge pricing as far as I can tell. For the first week when you checked the rider information screen you saw the old surge multiplier.
Does this mean that Uber is overcharging the rider and not paying the driver based on the total amount? Yes, but this is nothing new and has been around since the implementation of "upfront pricing." Can we figure out what surge Uber is charging to the customer? Yes, but that doesn't mean we would be paid the full amount.
The math is simple. Subtract the booking fee, the per mile and minute amount at the rider's rate. That number represents the total surge paid by the rider. Subtract the surge amount paid to the driver and you are left with the surge Uber charged the rider.
Long Rides
In their blog post, Uber promises us that this is "the minimum surge amount that you’ll earn on your next trip." On longer trips the surge amount might increase depending "on time, distance, and the rider price of a trip." If you look at my surge ride data below you will notice that only a handful of rides increased the surge. It does not seem to be linked to distance but rather connected to the rider's price. Only when Uber can charge the rider a huge surge price will the driver's surge price increase. We would need a lot more data to prove this statistically but it does seem to be correlated. Sticky surge or not most rides will not increase in surge price.
Offline, no surge
Online surge shows
Surge Visibility
Another major problem is that the surge doesn't appear on the map unless you are online. This can be a huge annoyance if you are a driver waiting for the surge to appear before going online. The worst times for me are positioning myself for an FCC game or the bar close surge to begin so I can try to maximize my earnings.Some have claimed this is a conspiracy by BIG RIDESHARE to force us to stay online and just take ride after ride after ride. If it is an attempt at mind control by the Deep Uber State, it is a poor attempt at best. Simply toggle online and offline. Once the surge zones appear they stay on the map, they just don't update.
Rather than a conspiracy by BIG RIDESHARE, I think it more likely an issue with displaying the new uber surge map in one market rather than all without completely updating the app. I imagine that when the entirely new version of the uber app, that looks quite good, this issue will be fixed.
The New Uber Surge and Your Earnings: The Ugly (Truth)
Now let's talk about the ugly truth, driver earnings with the new Uber surge. Is this a way for Uber to start taking a higher percentage of the rider's fare?
To examine if Uber is taking a higher percentage of the rider's fare with the new surge compared to the old we need to have some ride data. I've tracked 68 rides on the new surge and compared them to the same number of the old. I also compiled 28 surge rides from Friday bar close and before and after a Saturday FCC game. These should give us a group of surge rides that occurred under similar conditions. The results may surprise you.
Aggregate Surge Rides
So far, I have compiled 68 surge rides from the Pennysurge and compared them with the same number of surge rides from the old surge pricing. These results are just an aggregate of all rides and do not take into account the surge conditions. The conditions are important to compare certain times and events.
Overall, there does not seem to be much a discrepancy in the old surge vs. the "pennysurge." My earnings were slightly higher with the old surge, but luck could be the explanation. Uber's percentage of the total rider fares are almost identical. Uber took 38% of the total rider fare on the new surge and 37% on the old. Not much of a difference.
So is the new Uber surge pricing a way to take a higher percentage of rider fares? It doesn't seem to be the case. Uber is taking just as high of a percentage as before, probably since the implementation of upfront pricing.
Bar Close and FCC Game
Other than Riverbend pickups, that suck and are not at all worth it, bar close and FCC games have provided the highest surge zones that have lasted for the longest periods of time. We can look at earnings and Uber's cut of the rider's fare during similar surge conditions.
I was able to collect 28 surge rides from these times. The most surprising result was that Uber made less money with the new surge than the old. Their cut of the total rider fare was 38% under the old surge and 36% under the new. Again, not the change we expected if the goal of new Uber surge pricing is to take more of a cut of the total rider fare.
How is the New Uber Surge going in other markets?
Christian at the Rideshare Guy Blog wrote a great post about the new surge. His data is from a driver in Charlotte and produced similar results. Uber took 28% of the total rider's fare from 78 surge rides. Uber seems to be making more money off me, at 38%, than this driver in Charlotte.
What about Lyft?
Christian's post also discusses Lyft's Primetime in Tampa Bay. This data shows that Lyft is losing money on the new Primetime rides. Lyft also tested out the same type of Primetime pricing as Uber's new surge in Chicago. Mellisa Barry, a Chicago driver, has a great post about it on the Rideshare Guy blog. It is worthy to note that overall Lyft loses money with the new Primetime.
Lyft already postponed the new Primetime testing. Most likely because they were losing a lot of money on short rides. Chicago probably has a lot more short rides on any given day than a smaller market like Cincinnati. Perhaps Uber is only testing the new surge in 6 midsize markets, not in any major cities. No New York, no Chicago, no L.A. Tampa Bay is probably similar in size to Cincinnati so it could offer some points of comparison.
Going forward with the Pennysurge
What to do now? Will the new Uber surge remain in place or will it vanish like with Lyft? Furthermore, what can we drivers do in the meantime? How can we adjust our strategy to maximize earnings?
The "sticky surge" will be a huge component of my future driving strategy. I plan to implement a very, very strict cancellation policy and it may also come in handy if I'm looking to grab a last late night or a time where I've just missed the peak surge and highest demand.
In the last 3 weeks I've found myself driving for Lyft instead of Uber during the peak demand times. This past FCC game I drove exclusively for Lyft and made $47 off 3 rides in an hour and change after the game. Not bad, those were times I almost exclusively drove for Uber.
If the new surge is still in effect once the students return I plan on cleaning up doing small cross campus rides. During peak times in the morning and almost every evening a $10-12 surge should be popping up. These rides will pay $13-15 for 1 mile trips and you can easily do 3 or maybe even 4 per hour. I will certainly be stalking those "Oh Shit! I'm late for class" rides in the morning. Knowing your market can really help you find little times to maximize your earnings with the new Uber surge pricing.
If you're only signed up for Uber think about signing up for Lyft. There's also DoorDash, GrubHub, Shipt, and Postmates. There are sign up bonuses available for DoorDash and Lyft in Cincinnati and probably Postmates when it goes live in a few weeks. Don't put all your apps in one basket.
Stay safe out there drivers.
Posted from my blog with SteemPress : http://www.cincyrideshare.com/new-uber-surge-changes-and-your-earnings/