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The Almighty Buck Businesses

Uber And Lyft Take A Lot More From Drivers Than They Say (jalopnik.com) 28

Posted by msmash from the daylight-robbery dept.
Uber and Lyft have slashed driver pay in recent years and now take a larger portion of each fare, far larger than the companies publicly report, based on data collected by Jalopnik. From a report: And the new Surge or Prime Time pricing structure widely adopted by both companies undermines a key legal argument both companies make to classify drivers as independent contractors. Jalopnik asked drivers to send us fare receipts showing a breakdown of how much the rider paid for the trip, how much of that fare Uber or Lyft kept, and what the driver earned. In total, we received 14,756 fares. These came from two sources: the web form where drivers could submit fares individually, and via email where some drivers sent us all their fares from a given time period.

Of all the fares Jalopnik examined, Uber kept 35 percent of the revenue, while Lyft kept 38 percent. These numbers are roughly in line with a previous study by Lawrence Mishel at the Economic Policy Institute which concluded Uber's take rate to be roughly one-third, or 33 percent. (Per its filings with the SEC, Uber says it takes about 25% of what drivers earn as its "take-rate.") Of the drivers who emailed us breakdowns for all of their fares in a given time period -- ranging from a few months to more than a year -- Uber kept, on average, 29.6 percent. Lyft pocketed 34.5 percent. Those take rates are 10.6 percent and 8.5 percent higher than Uber and Lyft's publicly reported figures, respectively.
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Uber And Lyft Take A Lot More From Drivers Than They Say More

Uber And Lyft Take A Lot More From Drivers Than They Say

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  • The money quote (Score:3)

    by Rick Zeman ( 15628 ) on Tuesday August 27, 2019 @12:24PM (#59129964)

    "Vaheesan went on to say the findings “support the argument that their business model is built on large scale labor exploitation.”"

    In other words, welcome to the gig economy.

  • I think it has been obvious that the high tech taxi companies are faced with the same problems that ultimately limited the number of licensed cabs to begin with. There aren't enough customers who are willing to pay for enough rides at the price it actually costs to provide that ride. A high tech dispatch system doesn't really cut costs enough to make that much difference. Uber has been subsidizing every ride with investment capital. That can't work indefinitely. So it is experimenting with how to shift cost

    • your right and wrong... uber/lyft aren't sustainable, and are definitely coasting by on VC money. (Speaking of, isn't it crazy how uber, a company that has never turned a profit and is hemorrhaging money every quarter has a higher market cap than Ford -- by about 20b?)

      But, the thing that limits the number of cabs is the medallion system (at least in most jurisdictions) -- basically the local gov't says you can't drive a cab without a medallion, and then they limit the number of available medallions.

      Uber an

      • If medallions were driver-based, only for owner-operators, issued as needed, and non-transferable, it wouldn't have been as much of a problem. Unfortunately taxi medallions turned into a speculation scheme and anyone wanting to operate a taxi business wound up having to devote a huge portion of their operating income to financing the medallion.

        In smaller communities where the medallion problem didn't exist, Lyft and Uber actually wound up being more expensive than the incumbent taxi service (where the owner

        • It's because this industry does not scale well for large populations, and never will. There is a real resource limitation which is road capacity. Compare that to another real limitation, frequency spectrums. Why is it ok that they monetize ownership of frequency spectrum but not ok that they monetize the right to use the road to carry passengers in the form of a medallion? Why is it wrong to prevent the inevitable race to the bottom that happens when the absolute cheapest worker gets the job in the abse

        • Re: (Score:2)

          by AvitarX ( 172628 )

          Not just better dispatch, but also better availability.

          Cabs where I live were terribly unreliable unless you were doing a prescheduled airport or train station trip.

          With Uber and Lyft I can actually count on getting bet home if I don't drive.

        • Medallions shouldn't even be a thing, it is essentially a crony system to benefit entrenched interests and keep out competition. The most the government should be involved is if they have a system where anyone who wants to be paid to drive passengers has to get a license or certificate with the cost of those only being the cost for a background check.

  • Vaguely interesting .... (Score:3)

    by King_TJ ( 85913 ) on Tuesday August 27, 2019 @02:45PM (#59130554) Journal

    For some reason, I was under the impression Lyft was keeping less of the fares collected than Uber was -- but this indicates that's not so?

    These claims that services like Uber are "unsustainable" makes no sense to me, in any case. The whole problem with them seems to be them spending far more than what's needed to keep such a thing viable and profitable.

    Essentially, they're providing an app-based dispatch service for people interested in transporting people around for money as a side job or as employment that doesn't have any set hours or a boss to answer to. It all goes way off the rails when you see huge office buildings and all the people hired in them for a business like Uber. But that's because it's so incredibly obvious all of that isn't necessary to make it work.

  • Driver Cooperative (Score:3)

    by DanielRavenNest ( 107550 ) on Tuesday August 27, 2019 @02:48PM (#59130572)

    Drivers should form a cooperative, get an app made, and pay the co-op actual cost of running the app. They keep the rest.

    The underlying question is if drivers are doing all the work, and paying for vehicle maintenance and gas, what are Uber and Lyft spending 1/3 of the take on that they still lose money? Where is it all going?

    • A lot of it is going to fight lawsuits against their business model. The entrenched taxi industry has deep pockets and paid-for regulation and politicians.

      For a while Uber wasn't allowed to pick up at our local airport because they didn't want to have to pay a $2 per ride charge just to pick up / drop someone off at the airport. How the hell a municipal airport can get away with that is mind boggling.

  • Comment removed based on user account deletion
  • The Uber/Lyft share doesn't seem that different from what Taxi companies take: https://work.chron.com/much-fa... [chron.com]
  • Do they raid the tip jar too. I typically tip 20 to 25% of the total amount, that probably covers the uber/lyft overhead on the base fare. So much ambiguity on how it is all calcuated.

  • The Ride Share services were intended to use excess capacity of cars when the owner was willing and able to drive. Or to put it another way, guys make a few bucks with their car when they're not working their regular job.

    Unless Uber or Lyft prohibits drivers from leaving their service, it seems to be a personal decision by the car owner/driver to determine if the money they get in exchange for sharing their car is worth it.

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