You're right, wrong terminology. Was trying to express that the largest costs of the trip are the driver's fuel and car costs. By "fixed" meaning the driver has no obvious way to change those other than whatever car they bought in the first place. So, a 20% cut in revenue to the driver is significantly more than a 20% cut in earnings/profit.
"So, a 20% cut in revenue to the driver is significantly more than a 20% cut in earnings/profit."
I wasn't talking about the implication of a 20% reduction in revenue. I was talking about a reduction in 20% in per unit price, with a simultaneous increase of >=20% in unit volume. Together, these would create an increase in revenue.
Given that at least some costs (car payments) are fixed, we cannot know whether this 20% reduction in price will reduce driver profit, without knowing (i) the marginal cost per unit, and (ii) what the % increase in unit volume is.
For example, if fuel costs (and additional maintenance costs) are 25% of the price of a ride, then decreasing ride price by 20% whilst increasing # rides by >=27% would increase both revenue and driver profit.
Small math quibble: a 20% reduction in per unit price requires a 25% increase in unit volume. 20% reduction = 0.8 times the price, 25% increase = 1/0.8 times the volume.
For a reducto ad absurdum that I use to help remember this thing: a 100% decrease in price isn't counterbalanced by a 100% increase in volume.
Oops. Yes, I stated 20% increase earlier in my answer. But I think the final number (27%) is correct. It's higher than your 25%, because I assumed non-zero fuel costs. So breaking even on revenue wouldn't be sufficient to break even on profit.
"Not on a per mile basis though. A pay cut combined with more hours isn't exciting to me."
But this is highly dependent on your situation. If you're already working full time and/or have a comfortable and stable life style, this might be OK.
If someone has 20 hours available to work evenings during a week, but is only utilised for 10 hours per week, then an increase in hours (e.g. from 10->15), alongside a reduction in per-hour profit (e.g. $15->$12), might be welcome.
