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What Percentage Can Uber & Lyft Raise Chicago Rates w/o Hurting Business?

AllenChicago

Well-Known Member
June 3, 2019

Summertime is coming and gas prices are increasing, like they always do. To add insult to injury, the Illinois gas tax is increasing from 19 cents per gallon, to 38 cents per gallon, on July 1st. We'll be looking at Chicago area gas prices close to $4.00 @ gallon at the pump.

This article says a Taxi from Downtown to Ohare is about $40.

This Limo service charges $97 from Downtown to Ohare.

Since Lyft and Uber mirror each other with rate increases, what percentage could they raise the cost of rides in Chicago, and still remain the desired "go to" choice for current Lyft/Uber customers?

I think a 20% increase in fare wouldn't hurt us a bit. And doing so while gasoline prices are soaring, wouldn't make it look Uber/Lyft is trying to gouge the consumer. What do my fellow/lady Chicago rideshare drivers think? How big of an increase can the Chicago market easily handle?

-Allen
 

4Wheels5Stars0Hopes

Active Member
Well, that would take one company to suffer market share at the expense of higher rates. It’s not like both Uber and Lyft could raise rates the same. That’d be price fixing. Now, just speaking in regards to what customers pay? What’s the average fare, $12? Okay, $2.40 more so I don’t have to take a cab, or public transportation. Sure, reasonable.
 

u_no_me

Well-Known Member
Some passengers are more price sensitive than others. Many could tolerate double the price, while many will choose it ad hoc over their normal public transportation option based on any number of factors that often makes it a close decision. You would think that U/L's army of mathematical analysts and economists would be able to most accurately calculate their elasticity of demand, but short-sighted policy decisions by them in the past reveal that they don't always know what they are doing. It's certainly hard to say without reams of data.
 

AllenChicago

Well-Known Member
  • Thread Starter Thread Starter
  • #6
Well, that would take one company to suffer market share at the expense of higher rates. It’s not like both Uber and Lyft could raise rates the same. That’d be price fixing. Now, just speaking in regards to what customers pay? What’s the average fare, $12? Okay, $2.40 more so I don’t have to take a cab, or public transportation. Sure, reasonable.
I only drive for Lyft, but my passengers who use both rideshares, tell me Uber is priced about the same as Lyft. If the companies are accused of "price fixing", they can just say it's "competition as always".

Every day I take at least 1 passenger to Ohare from the Palatine area. The fare is always about $19.80 to $21.00. (Was higher before Lyft lowered the fare for miles and raised it for minutes. You get to Ohare in 23 minutes from Palatine.) They always tell me how reasonable Lyft and Uber are, compared to taxis. Nicer ride surroundings, friendlier driver too.
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Some passengers are more price sensitive than others. Many could tolerate double the price, while many will choose it ad hoc over their normal public transportation option based on any number of factors that often makes it a close decision. You would think that U/L's army of mathematical analysts and economists would be able to most accurately calculate their elasticity of demand, but short-sighted policy decisions by them in the past reveal that they don't always know what they are doing. It's certainly hard to say without reams of data.
It's almost as if Lyft/Uber are trying to be genuinely caring and sympathetic to customers. They must be making tons of profits.
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I think its no longer a matter of price in the chicago market. Riders are hooked. But if rates go up, look for an increase in pool rides.
70% of my rides are "shared"...what Uber calls "pool". There's really not much price difference with Lyft between shared and non-shared.
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If Uber raised driver rates (time/distance) enough, surges wouldn’t be so important. More drivers will accept more rides.
I think Lyft got rid of "surge" (aka "prime time") a few months ago. Uber drivers are fortunate to still have it available.
 
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sUBERbs

Active Member
Uber's flat surge came months back too. I havent had the luxury of trying lyfts ppz yet.

Raise prices 15%, pay drivers a few cents more than lyft. Advertise to drivers that you're listening and increasing pay. Advertise to customers that rising costs have led to marginally higher prices and rates for drivers.

Good PR. Uber is already dominant here, and with higher pay they'd have better driver availability.
 

OP-Matt

Well-Known Member
Uber's flat surge came months back too. I havent had the luxury of trying lyfts ppz yet.

Raise prices 15%, pay drivers a few cents more than lyft. Advertise to drivers that you're listening and increasing pay. Advertise to customers that rising costs have led to marginally higher prices and rates for drivers.

Good PR. Uber is already dominant here, and with higher pay they'd have better driver availability.
Uber wouldn’t know good PR if it was served to then daily by a thousand Eats drivers.
 

northsider87

Well-Known Member
I only drive for Lyft, but my passengers who use both rideshares, tell me Uber is priced about the same as Lyft. If the companies are accused of "price fixing", they can just say it's "competition as always".

Every day I take at least 1 passenger to Ohare from the Palatine area. The fare is always about $19.80 to $21.00. (Was higher before Lyft lowered the fare for miles and raised it for minutes. You get to Ohare in 23 minutes from Palatine.) They always tell me how reasonable Lyft and Uber are, compared to taxis. Nicer ride surroundings, friendlier driver too.
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It's almost as if Lyft/Uber are trying to be genuinely caring and sympathetic to customers. They must be making tons of profits.
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70% of my rides are "shared"...what Uber calls "pool". There's really not much price difference with Lyft between shared and non-shared.
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I think Lyft got rid of "surge" (aka "prime time") a few months ago. Uber drivers are fortunate to still have it available.
Just curious... why do you only drive for Lyft? Like many other drivers, I drive for both.
 

EddieG

Well-Known Member
Since both have gone public, market share is somewhat important, but the bottom line and quarterly earnings is the name of the game. Both could easily raise their rates. Uber Pool is just way too cheap. It's so cheap it takes people off CTA. I would venture to guess that most of the drama Uber and Drivers deal with comes from cheap pool passengers as well. Why not raise the price 10 to 15%, just to remove 50% or more of your problem passengers.
 

SatMan

Well-Known Member
The simple answer to all this that uber would keep most of the increase while leaving the drivers high and dry.
This would cause a bigger problem for uber with the drivers....They are still figuring out their own ways to screw it up.
 

AllenChicago

Well-Known Member
  • Thread Starter Thread Starter
  • #13
Uber's flat surge came months back too. I havent had the luxury of trying lyfts ppz yet.

Raise prices 15%, pay drivers a few cents more than lyft. Advertise to drivers that you're listening and increasing pay. Advertise to customers that rising costs have led to marginally higher prices and rates for drivers.

Good PR. Uber is already dominant here, and with higher pay they'd have better driver availability.
Raising fares is a must. We're so low now compared to taxis, it's like the Uber/Lyft executives went on vacation 2 years ago, and never returned.

I see so many empty Lyft and Uber cars here in the NW Suburbs all day, it appears that this area is oversaturated.
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Lyfts power zones kept giving me +1.25 - 2.50 per ride when no one was in area
I liked it better when a 25% to 100% fare increase would show up in some areas, during times of high passenger demand/low driver availability. That was replaced with the measly $1.25 to $3.50 per-ride bonus you describe.
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Just curious... why do you only drive for Lyft? Like many other drivers, I drive for both.
I've been waiting for the new health plans to be available in Illinois, so I could return to full-time health insurance brokering. But governor Prickster put the kabosh on that initiative in January. He wants everyone without job insurance on ObamaCare, or nothing.

If the profits were better, I would drive for Lyft and Uber in a heartbeat! Driving people around is enjoyable, and the personal freedom is what I'm used to. But damnit, depreciation/maintenance/fuel, hit the revenue hard. Fares are way too low.
 
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New guy65

Well-Known Member
Raising fares is a must. We're so low now compared to taxis, it's like the Uber/Lyft executives went on vacation 2 years ago, and never returned.

I see so many empty Lyft and Uber cars here in the NW Suburbs all day, it appears that this area is oversaturated.
Everyone wants to make more money. What Uber and Lyft charge is generally way below a taxi. The problem is they have commoditized themselves instead of marketing the ease of use. Ie hit a button and someone shows up to take you where you want and it’s all electronic from ordering to payment to getting the receipt

The other side of the coin is that if there are empty cars everywhere then someone is willing to work for less. Otherwise why would the drive around a potential dead zone or during slow demand times.
To me it’s the same scenario as why would you drive someone from the loop to O’Hare to wait for a ride to god knows where during rush hour. It’s often not an efficient use of time. Sometimes driving someone from the loop to Wrigley at rush hour isn’t an efficient use of time if traffic sucks even with a decent surge.

I would also add that I’ve made less between 4pm and 7pm consistently the past few weeks compared to any other time of day even with surges as traffic has been a mess
 

AllenChicago

Well-Known Member
  • Thread Starter Thread Starter
  • #15
The simple answer to all this that uber would keep most of the increase while leaving the drivers high and dry.
This would cause a bigger problem for uber with the drivers....They are still figuring out their own ways to screw it up.
Even though the non-commissionable portion of the fare keeps edging up, we still keep 80% every dollar of the fare above that amount. I forget the exact name of that non-commissionable fee.
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Everyone wants to make more money. What Uber and Lyft charge is generally way below a taxi. The problem is they have commoditized themselves instead of marketing the ease of use. Ie hit a button and someone shows up to take you where you want and it’s all electronic from ordering to payment to getting the receipt

The other side of the coin is that if there are empty cars everywhere then someone is willing to work for less. Otherwise why would the drive around a potential dead zone or during slow demand times.
To me it’s the same scenario as why would you drive someone from the loop to O’Hare to wait for a ride to god knows where during rush hour. It’s often not an efficient use of time. Sometimes driving someone from the loop to Wrigley at rush hour isn’t an efficient use of time if traffic sucks even with a decent surge.

I would also add that I’ve made less between 4pm and 7pm consistently the past few weeks compared to any other time of day even with surges as traffic has been a mess
That's why I've been toying with the idea of being a "driver", but not being affiliated with a company. If you think about it, beyond matching us with a person who needs a ride, Lyft/Uber's contribution is minimum after that match.

We're contracted with Lyft/Uber, not working for them in the traditional sense. We can do whatever we want when not in "online" mode.
 
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New guy65

Well-Known Member
Even though the non-commissionable portion of the fare keeps edging up, we still keep 80% every dollar of the fare above that amount. I forget the exact name of that non-commissionable fee.
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That's why I've been toying with the idea of being a "driver", but not being affiliated with a company. If you think about it, beyond matching us with a person who needs a ride, Lyft/Uber's contribution is minimum after that match.

We're contracted with Lyft/Uber, not working for them in the traditional sense. We can do whatever we want when not in "online" mode.
You get distance and time plus a base fee. If it’s busy a surge payment. Sometimes you get 60% of the payment sometimes 150%. They city also takes its pound of flesh If it’s to the airports navy pier or McCormick place the city’s chunk is even more.

I would say that I probably get 80% at least of rider payments over time after subtracting the city fees. Purely a guess as I don’t look at every trip.
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Even though the non-commissionable portion of the fare keeps edging up, we still keep 80% every dollar of the fare above that amount. I forget the exact name of that non-commissionable fee.
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That's why I've been toying with the idea of being a "driver", but not being affiliated with a company. If you think about it, beyond matching us with a person who needs a ride, Lyft/Uber's contribution is minimum after that match.

We're contracted with Lyft/Uber, not working for them in the traditional sense. We can do whatever we want when not in "online" mode.
You know what you’re right.
I’m going to look into getting my own city licensing, excess insurance, payment systems and a magical client base that will give me a few rides an hour only when I want to drive while letting me effectively have anonymity with the riders.

On second thought after looking at the above I’m sure I missed something so I’m not going to dick with it
 
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OP-Matt

Well-Known Member
You get distance and time plus a base fee. If it’s busy a surge payment. Sometimes you get 60% of the payment sometimes 150%. They city also takes its pound of flesh If it’s to the airports navy pier or McCormick place the city’s chunk is even more.

I would say that I probably get 80% at least of rider payments over time after subtracting the city fees. Purely a guess as I don’t look at every trip.
Maybe you should look at your numbers instead of just guessing.

Looking at my Uber statement from 2018, net payout (not including toll reimbursements or incentives) divided by Gross fares (not including incentives, tolls, city/airport fees) = 74%.
 

New guy65

Well-Known Member
Maybe you should look at your numbers instead of just guessing.

Looking at my Uber statement from 2018, net payout (not including toll reimbursements or incentives) divided by Gross fares (not including incentives, tolls, city/airport fees) = 74%.
Probably because I look at what I make including incentives. Yes the have gone down but if I have 40 bucks for 60 rides that’s approximately 66cts per trip and if I average $10 before the incentives then the incentive it’s still 6% overall my gross would be over 80%
When it comes down to it I care about how much I make and not anyone else.
Sadly while giving up 26% of the adjusted gross in your case Is a lot it’s probably better than what sellers get on stub hub or selling an app on iTunes.

The saying is the right thing to do is not always the easy thing to do. In the case of rideshare companies the right thing to do is charge more and give the drivers a bit more. The easy thing to do is charge the same or less and squeeze anyone you can
 
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AllenChicago

Well-Known Member
  • Thread Starter Thread Starter
  • #19
You get distance and time plus a base fee. If it’s busy a surge payment. Sometimes you get 60% of the payment sometimes 150%. They city also takes its pound of flesh If it’s to the airports navy pier or McCormick place the city’s chunk is even more.

I would say that I probably get 80% at least of rider payments over time after subtracting the city fees. Purely a guess as I don’t look at every trip.
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You know what you’re right.
I’m going to look into getting my own city licensing, excess insurance, payment systems and a magical client base that will give me a few rides an hour only when I want to drive while letting me effectively have anonymity with the riders.

On second thought after looking at the above I’m sure I missed something so I’m not going to dick with it
If you specialize in giving rides to airports in the region, that would keep you busy. In this area, Lyft is a STEAL for passengers who want to go to Ohare ($28) / Midway ($52) / Milwaukee ($75) airports. I could take them there and not have to give Lyft a flat fee, plus 20% of my earnings.
 
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