Uber has been trending over the past year but at the start of 2016, it seems it's taking the first month of the year at a very slow place. To remedy this, Uber Technologies plans to drop prices in 80 cities in North America.
The all-too convenient ride-hailing business hopes this new strategy will move the needle higher. Uber has announced that it will cut prices starting in Los Angeles and San Francisco by 10%, Houston by 20%, and Richmond, Virginia by 15%. Fare cuts are planned to extend to up to 100 cities. This move by Uber will be in effect indefinitely.
Andrew Macdonald, the Regional General Manager of the company believes in price cuts when demands take a slow pace.
This may sound like good news to ride-hailers hoping to save money but it might be a hit for Uber drivers. Lower fares might mean that drivers are going to make less for every ride. The lower prices may attract more ride-hailing consumers and Uber expresses that the price cuts can also be an advantage to the drivers, indicating that there should be an increase of the number of trips.
Macdonald also explained that the drivers understand the logic behind this and they have been through price cuts before.
Marketing efforts does explain the rationale behind this maneuver when it comes to cementing income for the first month of the year but some users believe that if this becomes long term (since Uber indicated it is in effect indefinitely), it might upset the drivers. The worst that could happen, if this is not remedied quickly and properly, would be Uber drivers shifting or doubling with Lyft - Uber's main U.S competitor. Seth Miller, an Uber driver, had this to say on Facebook:
I knew this was never a full-time gig but hoped it would have lasted longer.
Uber, wanting to take care of its drivers, mentioned that drivers will get guarantees. Which means drivers will receive a certain amount of money per hour where there are price cuts.
To qualify, drivers must have been active on the system before Jan. 8 and accept 90%of ride requests. The amount guaranteed varies per city and time of day, with Uber making up for the difference.
Currently, there are no plans to decrease prices in Chicago and New York, reports indicated.
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