Featured in the media numerous times, a Senior Contributor for the Rideshare Guy and a regular contributor for us here at MarketScale, Sergio Avedian, a veteran Uber and Lyft driver known for his ‘surge only’ driving strategies, joins Daniel Litwin today to break down some changes affecting Uber and the rideshare landscape in general, particularly as it relates to California’s AB5 statute which went into effect on January 1, 2020, extending employee classification status to gig workers.
According to Avedian, one of the most significant changes will be that Uber’s upfront pricing will be going away. Instead, passengers will see a fare range when booking, and the final cost will be based on minutes and miles—similar to taking a taxi. Another change will enable drivers to see the destination before accepting the fare—this is an enhancement drivers have been requesting for years.
Avedian remarked, “You could understand in certain circumstances, Uber algorithms, without knowing the destination, would send you to Timbuktu; and then, getting back from there, it would be ‘dead-mile-ing’, and it would be truly devastating for the driver as far as their earnings are concerned.”
Further, Uber has revamped its Driver Terms of Service into a Platform Access Agreement (PAA) instead. Establishing a true peer-to-peer business model between the company and the driver wherein the driver will now be Uber’s customer and the rider the driver’s customer, the PAA stipulates that much like a credit card company, drivers will now pay Uber a 20-28% service fee for access to the company’s technology platform while charging the rider a Variable Marketplace Fee to use the platform. Also, Uber has capped the driver’s commission rate at 75%/25% (drivers = 75% of fare/Uber = 25% of fare).
While drivers’ earnings will remain the same (60¢ per mile/21¢ per minute), an exciting change as well is a test feature Uber launched for Palm Springs, Santa Barbara and Sacramento airport pickups (only). This new feature allows drivers to increase or decrease their own surge rate through the app by 10%, up to a maximum of 5 times. Although drivers can choose to opt-out of the surge rate, the ability to go below the normal 60¢ per mile enables riders and drivers in long airport waiting cues to be matched in a shorter timeframe.
To get more in-depth, in-the-know commentary about transformations within the rideshare ecosystem, listen to the Rideshare video stream with Sergio Avedian here. And to keep up with news, insights and trends surrounding the Transportation industry, stay tuned to MarketScale’s Transportation publications here.