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A Review of Uber’s Commission in the U.S

 

Since Uber first launched operations in 2012, its popular low-cost service- UberX has always had drivers pay Uber 15% as Uber’s commission. This means that, Uber takes one-fifth of every rider’s fare as commission.

Uber's commission

 

Changes In 2014

This took a sudden turn in 2014 when Uber started reviewing this percentage and increasing commissions in certain cities as a test. Beginning in May, Uber asked UberX drivers in San Francisco to start remitting 20% commission as against the previous 15%.

Later in May, Uber put a small group of new drivers in San Francisco and San Diego in a pilot program which saw them paying commissions as high as 30%.  Also, drivers who signed up after September 2, 2014 had to pay over 25% as Uber’s commission. Drivers felt this was largely unfair and took to the streets in protest, especially because it put drivers in a situation where they had to work more to retain the same pay grade. Uber called this commission reviews ” a test” but some of these tests became permanent once Uber saw the consequences weren’t exactly dire.

 

Changes In 2015

In mid 2015, Uber silently increased commissions from 20% to 25% for new drivers in five cities. These cities include New York, Toronto, Indianapolis, Boston and Worcester, Massachusetts.

 

Changes In 2016

Uber’s commission in San Francisco remained at 25% in 2016. It seemed the tests and wavering commissions in 2015 happened because Uber was trying to deduce if high commissions can limit the influx of new drivers in the test city. To buttress this point, a Forbes post stated that:

“Keeping the higher commission to recent drivers doesn’t actually limit its impact very much. commissionsUber’s workforce is constantly churning and growing: In January, an Uber-conducted study showed a quarter of its active drivers had joined in the last month. It’s unclear if raising Uber’s commission deters new drivers from signing up, but if the policy has spread from its first test city, it suggests it makes economic sense.”

In 2016, Uber said it would increase the 20% commission paid by drivers in Australia to 25%. However, General Manager of Uber Australia said that it would only apply to drivers who join the service after April 24. 

These changes and varying commissions are not totally out of place in the business world. For any business to thrive and compete effectively in an open market, it is essential that it keeps tweaking its policies till it arrives at something that works for all. However, it is important that the rideshare giant irons out discrepancies and arrives at a satisfactory percentage for all.

 

 

 

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