# It all makes sense now.



## MadTownUberD (Mar 11, 2017)

I think I figured out the business case for flat rate surge: lowering Uber's insurance costs. Hear me out.

So I find that I do OK with flat rate surge. The surge premiums are lower per trip, but I get more surge trips. Before I would sit in the middle of a 2-3x surge for 15 minutes and get nothing. Now I'm guaranteed to get something.

Most of the people grumbling are the ones who liked long surge trips. Well guess what? I like long trips at base rates. They pay a lot per hour and lower my vehicle costs by increasing fuel economy and decreasing brakes/transmission usage.

So the effect may be to weed out drivers whonuse expensive vehicles to do UberX, and therefore only drove during high surge. What happens if an expensive vehicle gets into an accident during high surge, which is often due to traffic or weather related conditions? That's right, big payout for Uber's insurance company.

Conversely people like me have vehicles that are less expensive to repair. And if we stay home because the flat rate surge isn't enough to compensate for treacherous driving conditions, well then maybe we shouldn't be out driving in the first place.

So by encouraging low cost vehicles and discouraging higher cost vehicles, Uber is managing their insurance risk.

How bout that?

It also discourages people from driving from, say, Milwaukee to Green Bay hoping to get high surge only to be disappointed and disgruntled as a result.


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## BigRedDriver (Nov 28, 2018)

MadTownUberD said:


> I think I figured out the business case for flat rate surge: lowering Uber's insurance costs. Hear me out.
> 
> So I find that I do OK with flat rate surge. The surge premiums are lower per trip, but I get more surge trips. Before I would sit in the middle of a 2-3x surge for 15 minutes and get nothing. Now I'm guaranteed to get something.
> 
> ...


Valid point. But I think the real reason was that these multiplier surges were stunting rider growth. Drivers were gaming it, some only going online when surging, and manipulating the surge by turning apps off until getting to the surge areas making surges go higher.

Can't say that I blame the drivers for doing this, but at some point pissed off pax's quit using the service.


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## 1.5xorbust (Nov 22, 2017)

BigRedDriver said:


> Valid point. But I think the real reason was that these multiplier surges were stunting rider growth. Drivers were gaming it, some only going online when surging, and manipulating the surge by turning apps off until getting to the surge areas making surges go higher.
> 
> Can't say that I blame the drivers for doing this, but at some point pissed off pax's quit using the service.


Guilty.


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## Sconnie (Apr 3, 2018)

That’s an interesting theory. This still seems like a money grab by Uber with pax still paying the multiplier rates. I guess if there’s a bright side we might not have to deal with the invasion of Milwaukee drivers on gameday.


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## BigRedDriver (Nov 28, 2018)

Sconnie said:


> That's an interesting theory. This still seems like a money grab by Uber with pax still paying the multiplier rates. I guess if there's a bright side we might not have to deal with the invasion of Milwaukee drivers on gameday.


I went back and looked at the few rides I've received the flat surge on. It looks like, on 2 of the 3 I've had, the pax was charged for the multiplier, not the flat? Cant be for sure, but Uber collected a lot more than me on those 2 trips!

If I were a customer, I'd be pissed


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## hanging in there (Oct 1, 2014)

MadTownUberD said:


> I think I figured out the business case for flat rate surge: lowering Uber's insurance costs. Hear me out.
> 
> So I find that I do OK with flat rate surge. The surge premiums are lower per trip, but I get more surge trips. Before I would sit in the middle of a 2-3x surge for 15 minutes and get nothing. Now I'm guaranteed to get something.
> 
> ...


Ok that's your theory, here's mine.

Old surge, 2.0, $100 ride becomes $200 to driver, Uber gets about $50 or so on a pax price of $250. (Assuming you long-haul a bit to recapture the fat they now build into "up-front rider fares".

New flat surge, $100 ride becomes $110 to driver, and Uber gets $140. You can bet the pax is still paying $250. Uber just managed to almost triple their profit with this one magic trick. And even more than that if you don't longhaul.

As long as drivers like you are fine with it, they will get away with it and plot their next profit-increasing scheme.

The ironic part is that they tell the riders that the higher surge fare is designed to increase the supply of drivers during high demand, so how do they justify taking most of that surge for themselves and the driver never sees it?


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## MadTownUberD (Mar 11, 2017)

hanging in there said:


> Ok that's your theory, here's mine.
> 
> Old surge, 2.0, $100 ride becomes $200 to driver, Uber gets about $50 or so on a pax price of $250. (Assuming you long-haul a bit to recapture the fat they now build into "up-front rider fares".
> 
> ...


2 birds 1 stone. They increase their surge trip profits AND cut their insurance costs. They might have to up their sign on bonuses to attract new drivers, but that's a one time cost as opposed to an ongoing one.

From a business standpoint this is brilliant.


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## RideshareUSA (Feb 7, 2019)

1.5xorbust said:


> Guilty.


I would be co-accused in this matter!


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## Atlwarrior (Nov 2, 2014)

MadTownUberD said:


> I think I figured out the business case for flat rate surge: lowering Uber's insurance costs. Hear me out.
> 
> So I find that I do OK with flat rate surge. The surge premiums are lower per trip, but I get more surge trips. Before I would sit in the middle of a 2-3x surge for 15 minutes and get nothing. Now I'm guaranteed to get something.
> 
> ...


No Uber and Lyft need to make a profit before going into the Stock Market. So they are robbing drivers by charging the pax the multiplier rate but throwing a few extra dollars to the driver.


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## mbd (Aug 27, 2018)

MadTownUberD said:


> I think I figured out the business case for flat rate surge: lowering Uber's insurance costs. Hear me out.
> 
> So I find that I do OK with flat rate surge. The surge premiums are lower per trip, but I get more surge trips. Before I would sit in the middle of a 2-3x surge for 15 minutes and get nothing. Now I'm guaranteed to get something.
> 
> ...


Moderator job is very stressed , time to take few weeks off. When we get stressed, we start to imagine things, some of the imagination can really go out of control.


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## MadTownUberD (Mar 11, 2017)

mbd said:


> Moderator job is very stressed , time to take few weeks off. When we get stressed, we start to imagine things, some of the imagination can really go out of control.


My day job is stressful.. .moderating UP is a pleasure.


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## Mole (Mar 9, 2017)

Introducing the $23 one mile trip almost a whole four minutes long.


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## _justjosh (Mar 7, 2018)

I've actually got a different theory on the new surge. But it does play into some of the ideas of combatting drivers who game the surge.

So in previous surge rider had to be in surge zone and requesting ride for driver to get surge pricing. All the while declining riders who were out of surge zone.

New surge driver gets a "sticky " dollar amount that is far lower than what the true multiplier surge the rider is paying. Now that driver is enticed to pick up a rider who is not in surge zone or else fear of losing the sticky surge. 

Uber collects huge cuts of the fare for long trips. Yes they "lose" out on trips where that particular rider isnt paying surge, but they're not really losing out at all.

In the past where that rider may have switched over to Lyft or another solution to get a ride when drivers would decline that non surge ride, drivers are accepting that fare because they have an extra 2.50 for that ride.


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## Sconnie (Apr 3, 2018)

_justjosh said:


> I've actually got a different theory on the new surge. But it does play into some of the ideas of combatting drivers who game the surge.
> 
> So in previous surge rider had to be in surge zone and requesting ride for driver to get surge pricing. All the while declining riders who were out of surge zone.
> 
> ...


I think that has a lot to do with it in addition to raking in more of that sweet surge money. It was postulated in a different thread that since Uber knows a lot of us drive both platforms, the new sticky surge will get us to turn the Lyft app off when we go through an Uber surge zone. This has worked on me a few times since the new surge was recently implemented in my market. They're able to make the Uber platform more reliable for the riders while hurting the reliability of Lyft on top of making more money. The only possible negative I see for Uber is more drivers opting to run Lyft during large events in markets that have multiplier PT.


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## FLKeys (Dec 27, 2018)

Sconnie said:


> I think that has a lot to do with it in addition to raking in more of that sweet surge money. It was postulated in a different thread that since Uber knows a lot of us drive both platforms, the new sticky surge will get us to turn the Lyft app off when we go through an Uber surge zone. This has worked on me a few times since the new surge was recently implemented in my market. They're able to make the Uber platform more reliable for the riders while hurting the reliability of Lyft on top of making more money. The only possible negative I see for Uber is more drivers opting to run Lyft during large events in markets that have multiplier PT.


When I went through a surge zone Saturday and got a request on Lyft I did the Lyft request and left the Uber app running so I would not lose the Surge amount. On one ride I got an Uber ping while on a Lyft trip. I just sent Uber PAX a message saying finishing up current trip and traffic is heavy, will be to you as soon as I can. If they cancel at least the Surge sticky stays. If they don't I get them next.


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## Uber Crack (Jul 19, 2017)

FLKeys said:


> When I went through a surge zone Saturday and got a request on Lyft I did the Lyft request and left the Uber app running so I would not lose the Surge amount. On one ride I got an Uber ping while on a Lyft trip. I just sent Uber PAX a message saying finishing up current trip and traffic is heavy, will be to you as soon as I can. If they cancel at least the Surge sticky stays. If they don't I get them next.


Evil genius ?


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## kdyrpr (Apr 23, 2016)

FLKeys said:


> When I went through a surge zone Saturday and got a request on Lyft I did the Lyft request and left the Uber app running so I would not lose the Surge amount. On one ride I got an Uber ping while on a Lyft trip. I just sent Uber PAX a message saying finishing up current trip and traffic is heavy, will be to you as soon as I can. If they cancel at least the Surge sticky stays. If they don't I get them next.


Tsk tsk......texting while driving. I sincerely hope you did not get downrated by the Lyft pax.


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## FLKeys (Dec 27, 2018)

kdyrpr said:


> Tsk tsk......texting while driving. I sincerely hope you did not get downrated by the Lyft pax.


Predictive text is a great thing 3 letters for most messages I send out on a regular basis. PAX have no clue I'm texting unless they are in front seat. Has not happened yet. I don't stick my phone in the window, it is down near my gear shift where I can rest my hand on the gear shift and manipulate my phone with my finger out of sight. There are always ample times to send a message while stopped at a stop sign or traffic light.


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## bobby747 (Dec 29, 2015)

the mod is wrong about insurance....its all about the money.. we make less on long trips and all trips make uber avg 40% comm each ride..it goes up and down as high as 52%... but if u do 40 trips do your avg total..


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## MadTownUberD (Mar 11, 2017)

bobby747 said:


> the mod is wrong about insurance....its all about the money.. we make less on long trips and all trips make uber avg 40% comm each ride..it goes up and down as high as 52%... but if u do 40 trips do your avg total..


You're right, insurance doesn't matter at all.


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## bobby747 (Dec 29, 2015)

ins matters i have full comm. but i think your theory is very wrong as a driver 5 years all platforms.....its not about the drivers . new surge was how to control more cash flow to uber.....


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## MadTownUberD (Mar 11, 2017)

bobby747 said:


> ins matters i have full comm. but i think your theory is very wrong as a driver 5 years all platforms.....its not about the drivers . new surge was how to control more cash flow to uber.....


Would Uber have higher or lower insurance premiums if there were fewer expensive vehicles being driven? Most drivers do not have commercial insurance, especially not weekend warrior types with newer SUV's. If they get into an accident, Uber's insurance has to pay out.

But yes I agree that they get more profit just from the new surge pricing itself, and I believe I even acknowledged this in my OP. I was just exploring other ways the new surge pricing benefits them.


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## No Prisoners (Mar 21, 2019)

Flat surge= gouge riders and pay drivers less =uber's earnings grow. 
Notice that flat surge keeps decreasing while surge price to riders increasing.


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## bobby747 (Dec 29, 2015)

if you have a surge app. you can see how your fares dont get bumped up... or you get no new flat surge. I am full time alot of 50 % surges get delayed 5 full minutes till we get say $1.50....$2.50... etc...but we have a choice to work or not to work...I choose to let it get higher first..as I know the drill..I am not an ant. I am smart at what I do


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## nouberipo (Jul 24, 2018)

BigRedDriver said:


> Valid point. But I think the real reason was that these multiplier surges were stunting rider growth. Drivers were gaming it, some only going online when surging, and manipulating the surge by turning apps off until getting to the surge areas making surges go higher.
> 
> Can't say that I blame the drivers for doing this, but at some point pissed off pax's quit using the service.


But Uber IS charging the surging rates, just not passing it onto the driver.

As for gaming the system, the same can be said for the $1 or $2 sticky surge zones. I for one never take a ride that doesn't have a personally determined minimum surge. If it is raining, snowing, during rush hour it is guaranteed Uber is charging a surge for people just not passing it along. Today in Cleveland it rained most of the day and its still cold. It is a Friday which has traditionally been a high surge day. I watched the app from 8am until now (7pm) and only a couple times during the day (not rush hour nor when raining) did a fake surge appear on the screen.

It is complete idiocy to drive without a surge as you are basically paying (maybe not now but later when you no longer have a working car) to drive people around to make Uber money. How assinine does that sound? What job would you go to that pays you less than minimum wage and the longer you are with them the more decreases in pay you see? I think Uber driving is a barometer on society....the more drivers there are the more desperation out there to pay bills which in turn gives some sort of lens on society in general. If Uber and Lyft can skirt the laws/regulations what is going to stop other companies from following suit? What if everyone becomes labelled an independent contractor which means pay doesn't have to be minimum wage nor need to meet regulations associated with being an employer? Think about it......I am sure more than a few CEO's and C-Suite personnel are licking their lips and trying to figure out how to turn their traditional employees into independent contractors. Uber and Lyft are leading the fight to create new norms and I am afraid if policies and regulations don't stop them in their tracks, it will have a daunting impact on society now and in the future.


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