Pinch us, we must be dreaming.
In a development that s coming way too early for April Fool s Day, ride-share behemoth Uber says it ll drop prices in 80 North American cities, including LA and its home base of San Francisco, starting this past weekend. Why, you ask, might a company valued north of $50 billion reduce its rates?
To make even more money, it seems.
By cutting prices by 10 percent in LA and SF, 20 percent in Houston, and 15 percent in Richmond, Virginia, the company hopes to pump up demand during a traditionally slow time of the year.
In a post on its website, entitled Beating the Winter Slump: Price Cuts for Riders and Guaranteed Earnings for Drivers, Uber posits that price-cutting usually helps everyone:
Five and a half years in, we ve learned that the single most effective way to boost demand during the winter slump is to cut prices for riders. Starting tomorrow — just like last year and the year before — we re cutting prices in more than 100 US and Canadian cities, giving riders one more reason to head out of the house, ditch their keys, and avoid parking.
Higher demand means more time moving people, less time spent waiting around and more money for drivers. And if drivers aren t busier, prices will go back up again. In addition, we are guaranteeing earnings for drivers to ensure that no one is disadvantaged. That s 24/7 incentives to put drivers at ease.
Uber says past price-reduction campaigns have translated into more money in its drivers pockets: 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.
What s Uber hoping to gain from this move?
Higher demand means more time moving people, less time spent waiting around and more money for drivers. And if drivers aren t busier, prices will go back up again. In addition, we are guaranteeing earnings for drivers to ensure that no one is disadvantaged. That s 24/7 incentives to put drivers at ease.
As Bloomberg Business points out, lower fares mean that drivers make less per ride. Uber said lower fares will attract more riders, which should increase the number of trips per hour. Not everyone agrees:
Harry Campbell, who runs a popular , said the change will probably upset a lot of drivers. I don t think there s a single driver that s been around for any amount of time that thinks lower fares means that they re going to make more. I don t buy that for one second, he said. Seth Miller, an Uber driver in Florida, said the fare reductions will prompt him to spend more time driving for Lyft, Uber s main competitor in the U.S. I knew this was never a full-time gig but hoped it would have lasted longer, Miller wrote in a Facebook message.
Another Uber driver, Ryan Talley, told Bloomberg that Uber s promises in the past left a lot to be desired.
The guarantees don t last; they only last for about two months, Talley said. All they re worried about is their own bottom line.
Credit: AP Photo/Eric Risberg
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