Uber discounts will be offered in 100 cities across the United States and Canada, in an effort to boost demand after the company has been experiencing a slow-down in business in recent days.
The price reductions have already been introduced across 80 cities on the North American continent, starting from Saturday, January 9.
Eventually they will extend across 20 other urban areas, in an effort to generate more interest in the company’s services, during what is traditionally known as the least profitable time of the year.
Due to excessively low temperatures, people are less eager to leave the comfort and warmth of their homes, which is why retail sales tend to drop, and apparently even Uber’s revenues are negatively impacted, which led to these new price cuts, meant to accelerate demand.
In San Francisco and Los Angeles for instance, fares will cost around 10% less, on average. In Richmond, discounts will be slightly higher, at 15%, while Houston residents will get to benefit from even more convenient rates, around 20% lower than usual.
In New Jersey, ordinary trips will be around 15% cheaper, while the price for rides heading to the airport will be slashed in half.
Meanwhile, in Wichita, Texas Uber prices will drop by as much as 35%, whereas fares in other metropolitan areas, such as Chicago, Boston and New York City will stay virtually the same, until further notice.
As explained by Andrew Macdonald, Uber’s regional general manager for Canada, Latin America and the Central United States, it’s the company’s tradition to offer such discounts whenever there are fewer customers asking for ride-hailing services.
The purpose is to attract more and more clients, which will lead to a greater number of fares per hour, and therefore boost revenues significantly.
On the other hand, Uber drivers have been less than pleased with the recently announced measures.
For instance, Seth Miller, based in Florida, has declared that although he had been wishing to maintain his collaboration with Uber for as long as possible, he will be forced to pledge his allegiance to rival company Lyft instead, because he is fully aware that otherwise his income will be significantly reduced.
This opinion is also shared by Harry Campbell, whose “Rideshare Guy” blog and podcast dedicated to rideshare drivers. According to him, experienced drivers are fully aware that a reduction in fare price will not be beneficial in any way to their profits.
Meanwhile, Uber representatives have responded to these misgivings by saying that money guarantees will be introduced for their collaborators, in the places where discounts are in effect.
For instance, in San Francisco if drivers don’t manage to earn at least $24 per hour, they will be offered compensation so that they can reach at least this minimum amount. When demand is at its highest, the hourly earnings promised to those giving Uber riders will be of a minimum $30.
However, in order to be included in this program providing a guaranteed level of income, drivers will have to show proof that they’ve been with Uber before January 8, and that they have only refused 10% of the pickups they’ve received from would-be clients.
Even with this system of secure payment, meant to maintain or even rise the level of guaranteed income, Uber drivers remain apprehensive of the way price-cutting will impact their earnings.
Ryan Talley for instance has recounted that usually subsidies are only given for a couple of months, and afterwards support for collaborators is discontinued even if reductions are still in effect.
It remains to be seen if the newly introduced discounts will have the desired impact on customer demand, especially since Uber is now considered the most profitable startup company in the world, its market valuation having reached $65 billion.
Last year, similar measures were taken in January, but the number of requests for users didn’t experience such a dramatic boost, in order to compensate for the earnings lost by lowering fare prices. As a result, eventually the entire experiment was seen as a failure, and higher prices were soon reinstated.
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