
Uber And Lyft take more from drivers than they say: survey - cleansy
https://jalopnik.com/uber-and-lyft-take-a-lot-more-from-drivers-than-they-sa-1837450373
======
Ididntdothis
Seems we are developing an economy of almighty middlemen. Apple taking 30%,
these guys are also in that range. When I was contractor there were agencies
that would often take 40% or more cut.

There was this dream of the internet enabling the smallest players to be able
to sell directly but instead we have these powerful institutions that take a
huge cut out of every transaction.

~~~
gmueckl
We see this because small players have a visibility problem: if they stick to
their private little corner of the internet, they have to put a lot of effort
into getting noticed and attracting customers. Likewise, customers also have a
harder time finding good offers if they are hard to notice. Centralized market
platforms (Amazon, app stores) reduce that offer on both sides by pooling both
sides and making them accessible to each other. And because of the inherent
networking effects, these platforms can ask a nice premium and still be
attractive.

~~~
Ididntdothis
This is a really bad trend. The little guy never develops a reputation. Let's
say you are the best Uber driver or the best Amazon merchant with a perfect
track record. The day Uber or Amazon decide to cut you off you lose
everything. You have nothing to show for.

it would be better if these platforms were neutral entities that just
connected sellers to buyers in an efficient way. But they try to totally
control the sellers.

Back to the contracting example. For a while I worked with an agency that took
only a 3% cut for filing paperwork with the big company. they provided an
efficient service for both buyer and seller (me). But the 30% guys are just
parasites that control the market.

~~~
nindalf
> the 30% guys ... control the market.

Why is that? Is it because they were providing a superior service? If they
were providing an inferior service, how did they control the market?

~~~
moate
Because many of them created their market space years ago and are now so
established that it's difficult for a competitor to stage a worthwhile effort
to draw revenue away from them. Because they have so much money available to
them they can even afford to deal with a challenger by dropping their
prices/rates lower than that competitor, operating at a loss for however long
it would take for that competitor to die off, and then go back to business as
usual(the "Walmart" strategy).

~~~
navigatesol
> _Because many of them created their market space years ago and are now so
> established that it 's difficult for a competitor to stage a worthwhile
> effort_

I find this opinion (which is common on HN) hard to reconcile with the idea
that established companies are "old and slow" and susceptible to "disruption"
(also common on HN).

Like, no one can take out Apple's AppStore stronghold, but Tesla is going to
bankrupt a century-old trillion dollar auto industry with a global supply
chain infrastructure? Which one is it?

~~~
wtetzner
Aren't these different things, though? Auto companies aren't platforms for the
small guys to sell their things.

Nobody is saying it's impossible to sell your product without going through
one of the big platforms, just that it's expensive and difficult to market
your product without doing so.

Also, I don't think it's ever as simple as established companies being "old
and slow" so startups can "disrupt" them. Some companies are old and slow in
certain dimensions, but at the top of the game in other dimensions.

Further, established companies have inertia, which can work for or against
them.

~~~
navigatesol
I do agree with you, mostly with the point that every company/industry is
different.

But I have to point out we _do_ hear things on this site like, 'the auto
industry is old and slow", and I think it's false. Some of the companies are,
and some are quite progressive. Industries are rarely homogenous.

------
frankbreetz
How is it that Uber is losing money? They have such a huge amount of income,
There is an Uber on almost every block in America. They don't pay their
contractors a living wage and seems to me they have extremely little overhead.
They don't have to maintain cars or even have an HR department for their
employees. All they do is develop an app that does nothing special. Is it all
R&D?

~~~
overcast
They are burning through VC money by subsidizing the cost of each ride, thus
artificially deflating its actual cost. Once the gravy train runs out, these
ride sharing companies will have no choice but to jack up the prices to their
actual value. You'll then have normal cab prices, but without the headache of
hailing one.

~~~
Fogest
> They are burning through VC money by subsidizing the cost of each ride

I've never understood that. How are they subsidizing it? They take over 25% of
what the customer pays and all they have to do is run the app. Whether they
charge $10 or $15 for the same ride the cost to them is the same. It doesn't
make sense, they don't have any extra cost by making a ride cheaper.

~~~
overcast
Because the cost of a cab ride is not $6 to drive entirely cross town. It just
isn't. Uber is popular because it's cheap as shit. If SuperRide came out, and
it was half the price of Uber, no one would ever use Uber again.

~~~
Fogest
But that doesn't mean Uber is losing money by offering it less. It costs the
driver more to drive farther for less, Uber doesn't have a higher expense for
a longer ride.

~~~
overcast
"Investor reports reveal riders only pay 41 percent of the full cost of each
ride, with investors footing the remaining 59 percent."

I hope this explains it more clearly.

[https://www.vice.com/en_us/article/9a3vye/uber-true-cost-
uh-...](https://www.vice.com/en_us/article/9a3vye/uber-true-cost-uh-oh)

~~~
Fogest
Still doesn't really explain it. A taxi ride is not 59% more expensive than an
Uber, yet a taxi driver is getting paid a better wage. So Uber is definitely
burning more money in other areas not related to the ride itself. In Canada
now the cost of an Uber when they tack on their safety fee and booking fee is
pretty much on pare with what a taxi company charges for the same ride. And
now taxi companies where I am from have their own apps just like Uber to
request a taxi and get an upfront fee. So now I can easily compare the two
costs and see that a taxi is usually the same fee or a $1 or $2 more.

~~~
rightbyte
Taxi companies are better at scaling than Uber. They can do bulk vehicle
procurements and sign service deals. It is no wonder they can pay wages and
not be that much more expensive.

~~~
Fogest
Sorry maybe I am failing to understand a concept here but Uber does not even
have to worry about vehicle costs at all, not to mention no expensive
overpriced taxi medallion.

------
javagram
“Jalopnik also conceded that there might have been selection bias for drivers
unhappy with the cut being taken out of their fares.”

Inaccurate headline

------
close04
Totally anecdotal: while travelling abroad I tried to order an Uber with my
regular account and card. The process went well up to the point where I could
see the price but then failed because my card was not accepted for some
reason. Immediately switched to "cash" and the price displayed went down. The
original price was 30% higher. The same evening I repeated the same steps with
another fare and got the same outcome.

I'm not sure if this was a coincidence, some local policy regarding paying
cash vs. card, or Uber doing something shady. But I asked all my friends to
compare the price with the driver (or pay cash, although this may be less
convenient) if they ever use Uber. I've read articles before that Uber was
showing the driver a lower price than the customer in order to give the driver
a lower cut. If this is the case then it wouldn't work when paying cash.

~~~
tedmcory77
How is this not directly fraud?

~~~
teraflop
It's not fraud to charge different customers different amounts of money for
the same service. Fraud requires misrepresentation; failing to volunteer
information like "you could get this service cheaper if you paid a different
way" wouldn't generally rise to that level.

It may be a breach of contract between Uber and its payment processor, though.
Often, credit card merchant agreements prohibit businesses for charging more
for credit card payments than for equivalent alternatives. Maybe Uber is just
flagrantly ignoring those terms, or maybe it has negotiated its way out of
them.

------
acd10j
I think Uber/Lyft provides much broader service compared to Apple/Google's 30%
percent cut for App store purchase and subscriptions , What they charge for
just hosting your app and providing payment gateway is outrageous.

~~~
pequalsnp
You're also paying for access to sell your app to the tens of millions of
people that use iOS or MacOS.

------
kerng
It's well known that they are in the red.

The question is, if the entire business model does actually work and the good
thing about capitalism is that we will see it over next 1-2 years as it's like
natural selection. If drivers stick around (or self driving becomes reality),
and riders are happy with pricing then both their customer bases are happy and
business will flourish.

Otherwise, stock will fall and they disappear.

~~~
Ididntdothis
Something is going wrong if a middlemen takes such a big cut and still can’t
make money.

~~~
kerng
The free market will tell us.

It works well for companies like Apple, Ticketmaster, etc..

That's what I tried to highlight with my post, which seems very reasonable, so
I don't understand the massive downvoting.

~~~
Ididntdothis
Looking at Ticketmaster or the Apple app store it seems that a free market
will lead to monopoly behavior once players grow beyond a certain size.

~~~
kerng
Correct, if a business model works and is successful it can lead to a
monopoly. And there are laws that try to tackle that.

But its going off topic because Uber and Lyft are far away from that position,
they hardly have a functioning business model in the first place.

------
cellular
I couldn't imagine being told to stop by getting a message on my phone from
the passenger in my backseat. Very degrading.

~~~
squeaky-clean
It's not really a message from the passenger. They updated their ride to
include the additional stop (a feature), and are apparently allowed to do this
realtime for the trip they are currently taking.

For the driver this would just appear like their current destination suddenly
changing, which I guess you have no option to deny except for asking them to
leave your car and canceling the trip entirely.

Being able to make major trip changes mid-ride is pretty crappy for the
driver. I'm also surprised the multiple stop feature isn't just for simply
letting someone in/out of your ride. But apparently Lyft actually encourages
you to use it to stop at the store. [0]

> Whether you’re picking up a friend or a bottle of vino, just add your stop
> into the app and your route will instantly update — making it a seamless
> experience for you and your driver.

The person in the article was driving for Uber. The verbiage on Uber's site
for this feature is more focused on passenger pickup/dropoff, but also doesn't
make it clear whether you're allowed to spend time visiting a store. I found a
rideguru post indicating you're limited to 3 minutes at a stop, but can't find
this officially.

[0] [https://blog.lyft.com/posts/add-a-stop](https://blog.lyft.com/posts/add-
a-stop)

[1] [https://ride.guru/lounge/p/whats-the-2-stop-rule-on-uber-
is-...](https://ride.guru/lounge/p/whats-the-2-stop-rule-on-uber-is-it-the-
same-with-lyft-are-we-not-allowed-to-stop-more-than-twice)

Edit, found this on an Uber blog post. Do riders really know, Uber? Do they?

> Riders know that each stop should be less than 3 minutes, so you can get
> back on the road as soon as possible.

[https://www.uber.com/blog/multiple-destinations-
us/](https://www.uber.com/blog/multiple-destinations-us/)

------
bobinaz
Unfortunate,but somewhat expected given their continual operation at a loss.
I’m curious who takes more.

------
amoitnga
Even if so, how does it matter?

