# Will rates slip again in 2015?



## elelegido (Sep 24, 2014)

UberLyft geeks certainly will have data models to try to predict the effect of any proposed rate cuts on their revenue. Trouble is, we don't know how those models work.

However we do know a few basics. First, as the fare per mile decreases in a given city, the number of total trip miles demanded increases.

Therefore one condition that _must_ be true in a city in order for Travis to contemplate a price cut in that city is that there must be excess driver capacity i.e. a saturation of drivers, ready to handle the increase in demand generated by the price cut.

Furthermore, the excess driver capacity must be sufficient to ensure that demand at peak times can be met without resorting to high surge multipliers.

Excess capacity must also be great enough to support the loss of drivers who would quit when the fare reductions and therefore wage drops went into effect.

Also, demand for trip miles must rise at a greater percentage than the percentage reduction in the fare per mile. Otherwise, total revenue would decrease, not increase. We cannot know if this will be so or not, indeed nor can Travis, until he implements each fare reduction. So far, revenue has increased after each fare reduction. He has admitted this in interview, and he would have reversed them otherwise. Remember how he spun last summer's "temporary" fare reductions... He covered himself by first saying they were for the summer only. In actuality they did increase his revenue, so he kept them. "Great news! We've decided to make them permanent!"

Anyway, as we just saw on NYE, Travis does now have driver saturation. He also now knows he can handle peak demand without resorting to super-high surge pricing. So, the stage is more than set now for fare reductions to come to a city near you.

All that remains is Travis to take a punt on whether the percentage increase in demand would be greater than his proposed percentage drop in fares. We don't know what his data models tell him, but I would expect, at the very least, more "temporary" fare reductions or possibly permanent reductions soon, in every market with excess capacity.

From what I see now, I'd say that is the majority of them.


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## Roogy (Nov 4, 2014)

He could tack on another 25 or 50 cents to the "safe rider" fee to ensure Uber's take is not reduced. Wouldn't put it past him.


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## winston (Jun 23, 2014)

Drivers are operating at a loss as it is now. Uber is growing just because more people here about it, not because they keep lowering prices. I'd guess most passengers don't even know the prices were cut several times this year.


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## elelegido (Sep 24, 2014)

winston said:


> Drivers are operating at a loss as it is now.


Operating at a loss means the opposite of making money - it means paying to drive pax around. If any driver is worse off financially each week than the week before, he is doing it wrong.



> Uber is growing just because more people here about it


Please provide your evidence for this



> not because they keep lowering prices.


 Again, evidence please



> I'd guess most passengers don't even know the prices were cut several times this year.


Maybe, maybe not. Who knows. But previous pricing is only one contributor to consumers' personal valuations of services. Anyway, if having knowledge of previous Uber pricing was a requirement for new customers to try the service, Uber would not have been able to start operations - before it started there were no previous prices.


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## chi1cabby (May 28, 2014)

The Uber motivation behind Rate Reduction in not Revenue Enhancement, but Market Share Gain.


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## elelegido (Sep 24, 2014)

From the Wall Street Journal:

http://www.wsj.com/articles/BL-DGB-35662

*Uber CEO Travis Kalanick: We're Doubling Revenue Every Six Months*

*Mr. Kalanick: *We're at least doubling every six months. It's probably more robust than that, but that's good enough&#8230;That's revenue. If you look at [the number of] trips, because we're going into lower and lower-cost products, the growth on trips is like 5, 6x.

So.... Travis is very interested in revenue growth, and says he achieves it by lower and lower cost products. I.e. by multiple rate cuts. Case closed.


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## UberXTampa (Nov 20, 2014)

I must admit Uber is doing one thing right: promotions!

I am expecting when target penetration is achieved in a market, rates would adjust up. At least the time value in the fare must be adjusted up and sooner than later.


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## elelegido (Sep 24, 2014)

UberXTampa said:


> I must admit Uber is doing one thing right: promotions!
> 
> I am expecting when target penetration is achieved in a market, rates would adjust up. At least the time value in the fare must be. Adjusted up and sooner than later.


If lower prices mean revenue and profit growth then there is no reason to raise prices.


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## chi1cabby (May 28, 2014)

elelegido said:


> If lower prices mean revenue and profit growth then there is no reason to raise prices.


I cannot find the article where TravisK says that Market Share gain comes before Revenue Enhancement in his decisions.
When I find it, I'll post it.


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## grUBBER (Sep 11, 2014)

How can Chicago rates be lower then Los Angeles' with their climate?
It may have to do with how much money an average passenger have


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## elelegido (Sep 24, 2014)

grUBBER said:


> How can Chicago rates be lower then Los Angeles' with their climate?
> It may have to do with how much money an average passenger have


Prices will stop falling when the driver pool shrinks small enough so as to not be able to satisfy demand.

There is a glut of drivers now. Plenty of oversupply; more than enough for further price cuts.


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## UberBlackPr1nce (Dec 28, 2014)

If rates get cut more people will become drivers. You guys are going all over uber facebook talking about "I only made 400 this week. Or " I only made 700 this time, I made doubled last year". You guys are attracting minimum wage drivers to the platform. To the naked eye 4-700 dollars a week is money to anyone making 10 bucks and hour and less. So Uber likes that you all go on facebook promoting your figures without detailed info on your expenses. You basically give free advertisement to more shucks to drive for Uber. But that's just my POV.


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## Josho (Nov 27, 2014)

they could raise the commision they take

they already increased to 25% from 20% for many drivers and the others could be next


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## Roogy (Nov 4, 2014)

Josho said:


> they already increased to 25% from 20% for many drivers and the others could be next


Is that in addition to the $1 "safe ride" fee? Drivers at 20% are already giving Uber ~25% when that fee is included. Drivers at 25% are really giving Uber 30%.


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## Jackie murphy (Dec 10, 2014)

Smart you catch on Uber only wants the dumb ones


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## Shea F. Kenny (Jan 3, 2015)

I started UberX in September, and EASILY grossed 1500 a week, and was paid around 1000. Now, I hover around 1100, and put in the very same 50-60 hours.

In fact, today I had to start firing up both Uber and Lyft apps, and took the first order, and shut the other off. 

Now I'm back where I started, so far. 2-3 mins between calls.

The only difference is, the trips are VERY short. Back in Sept, I would get a call from Chi, to a burb, maybe a local or two in the burb, then back to Chi.

Easy money. And it was a real blast to drive, for that many hours.

Now, it's dreading to hear those God awful words, "Hey, how ya doin!". "I'm just going up the street!"

LOL


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## elelegido (Sep 24, 2014)

Shea F. Kenny said:


> I started UberX in September, and EASILY grossed 1500 a week, and was paid around 1000. Now, I hover around 1100, and put in the very same 50-60 hours.
> 
> In fact, today I had to start firing up both Uber and Lyft apps, and took the first order, and shut the other off.
> 
> ...


Exactly; lots of drivers sitting around waiting. Time for a rate cut to get them moving again.


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## Roogy (Nov 4, 2014)

Shea F. Kenny said:


> Now, it's dreading to hear those God awful words, "Hey, how ya doin!". "I'm just going up the street!"


Words that cabbies have dreaded hearing for generations.


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## pako garcia (Oct 30, 2014)

elelegido said:


> If lower prices mean revenue and profit growth then there is no reason to raise prices.


Specually when travis has 1000's of drones and 1000's more in persoective willing to do that at at 1.10/mile or less


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## mizzrock (Jan 3, 2015)

Jackie murphy said:


> Smart you catch on Uber only wants the dumb ones


So I should quit.


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## mizzrock (Jan 3, 2015)

Shea F. Kenny said:


> I started UberX in September, and EASILY grossed 1500 a week, and was paid around 1000. Now, I hover around 1100, and put in the very same 50-60 hours.
> 
> In fact, today I had to start firing up both Uber and Lyft apps, and took the first order, and shut the other off.
> 
> ...


Been noticing alot of short trips and HUGE downtime between calls. I'm only a lyfter but was contemplating doing Uber as well or getting a real job.....


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## chi1cabby (May 28, 2014)

mizzrock said:


> I'm only a lyfter but was contemplating doing Uber


Before you sign-up for Uber, look into if $500 sign-up bonus for Lyft Drivers is still available.


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## JaxBeachDriver (Nov 27, 2014)

Roogy said:


> Is that in addition to the $1 "safe ride" fee? Drivers at 20% are already giving Uber ~25% when that fee is included. Drivers at 25% are really giving Uber 30%.


In addition to the $1 fee. UberXL in this market takes $1 off the top of every ride, then 28% of the fare.


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## Jackie murphy (Dec 10, 2014)

Same here my pay dropped 30 percent I quit 1/1/15


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