5 ms·

I still don't understand why Uber couldn't let drivers set their own fares. It seems to me that it should create a healthy market that in the end would be great

by comboy 11y ago

I still don't understand why Uber couldn't let drivers set their own fares. It seems to me that it should create a healthy market that in the end would be great outcome for consumers. E.g. some hours are much less profitable for Uber drivers - so they set the fare higher and thanks to that you can always find a driver when needed. On the other hand, higher current fare works as an invitation for the new drivers. It auto adjusts to drivers/users availability in given region.

jacquesm 11y ago
Because Uber is using these people as a resource and allowing them to set their own rates would cut in on Ubers margins. Drivers provide capital goods (a vehicle) and work (as opposed to hiring a bunch of employees which you'd have to pay even if there was no work) and they provide these at a moments notice at Ubers discretion. If Uber allowed drivers to set their own rates that would initiate a 'race to the bottom' reducing the fares and thus Ubers percentage. Because it is convenient to make these operators out to be independent entities for legal reasons does not rule out Ubers desire to treat them as unpaid employees for totally different reasons. From Ubers persective some independence is good, just enough to not assume any responsibilities that go with operating a company like this but too much independence (such as control over the rates) is a bad thing. The 'new middlemen' have to ride a very fine line here to protect their income stream. A real free market is simply not in Ubers interest, they would like the prices to stay as high as possible, basically what the market will bear.
- loceng 11y ago
  Followed by Uber eliminating drivers all together in the future, where possible, with self-driving vehicles. I have this nervousness, excitement, that would could see the biggest free fall in all of history for a company at some point in the future if they ever legitimately start abusing (that's what I would call it anyway) the relationship with the drivers.
  - masklinn 11y ago
    > Followed by Uber eliminating drivers all together in the future Nah, having to own and maintain a fleet of vehicles would bring about similar issues. Uber wants driverless vehicles but they'll want to subcontract to fleet owners (or individuals), not to be on the hook for maintenance and legal issues.
    - arethuza 11y ago
      Perhaps Uber will turn into a franchise operation where you get a franchise, buy a few cars and a base somewhere cheap to store and clean them and you just send them out to earn money.
    - dexterdog 11y ago
      But there will be a much more consistent experience from a services that vertically integrates the whole thing. Some people will prefer that. I will prefer to have more than one transportation company in the future.
- sharemywin 11y ago
  also, the more steps you add to the process the more people drop off similar to an abandoned shopping cart.
- halviti 11y ago
  >If Uber allowed drivers to set their own rates that would initiate a 'race to the bottom' Not necessarily, it could easily go both ways as it would create a market for people that want to pay more for "better" drivers.. people with nice cars (teslas and generally expensive automobiles) just to be seen in them or to experience riding in them, drivers that pamper their clients with newspapers, in vehicle entertainment, free water, etc.
  - jacquesm 11y ago
    You're right, it could go the other way. Note that Uber drivers protested the recent Uber price drop but Uber only drops the price to compete with other companies and does not care what happens to the drivers who are just a resource to them. So individual drivers may well increase their rates if they're left free to do so. But the biggest discriminator between getting a lot of fares and not getting fares will be price, not newspapers or free water and I suspect that the majority of the drivers would drop their prices in order to compete with other Uber drivers, rather than with other Taxi companies. This then takes away control from Uber over their revenue stream and would quickly erode the market. In countries where I've been where cabs were completely de-regulated cab rides were ridiculously cheap because of this effect.
  - nols 11y ago
    Not many people would regularly pay more for a more glamorous taxi ride. Most people I know see it as a commodity, "This driver hasn't died in a car accident, good enough for me".
    - comboy 11y ago
      Then you can set an option to always choose the cheapest available driver (I think it would also work as a reasonable default).
      - y4mi 11y ago
        which makes it a race to the bottom again - reducing ubers profit
- surge 11y ago
  The issue for drivers is that the rates are too "low". That's not an issue with racing to the bottom. If it was an issue just set a minimum, or minimum cut Uber will take. Then Uber drivers won't drive for less than they're willing to. That solves that problem.
repomies691 11y ago
Sidecar is trying the different model AFAIK. I'm myself very doubtful that it would work well in practice - as a consumer I don't want to haggle the price in the ordering process, I just want hassle-free ordering experience with the constant price level.
mannykannot 11y ago
Uber's best interests are not served by creating a healthy market, its preferred outcome is a de-facto monopoly (see also Amazon.) Competition benefits consumers, but winning is what most benefits corporations.
HappyTypist 11y ago
That's what the surge pricing system is intended to do, to some extent. However, significant variance in pricing removes the reliability and consistency of the service. Designing a UI to allow the user to see the supply market and set a rate xyr's willing to bear would also be a nightmare. Surge pricing aims to balance the supply/demand curve and a consistent experience, resulting in more future rides.
morgante 11y ago
Because I want to be able to consistently know how much an Uber ride will cost. Particularly in emerging markets, one of the biggest appeals that Uber offers is that you don't have to compare prices and haggle with drivers.
totalrobe 11y ago
For one thing, the app experience would be significantly more complex for users because the consumer would need to choose between drivers based on pricing.

by comboy 11y ago

jacquesm 11y ago

Because Uber is using these people as a resource and allowing them to set their own rates would cut in on Ubers margins. Drivers provide capital goods (a vehicle) and work (as opposed to hiring a bunch of employees which you'd have to pay even if there was no work) and they provide these at a moments notice at Ubers discretion. If Uber allowed drivers to set their own rates that would initiate a 'race to the bottom' reducing the fares and thus Ubers percentage. Because it is convenient to make these operators out to be independent entities for legal reasons does not rule out Ubers desire to treat them as unpaid employees for totally different reasons. From Ubers persective some independence is good, just enough to not assume any responsibilities that go with operating a company like this but too much independence (such as control over the rates) is a bad thing. The 'new middlemen' have to ride a very fine line here to protect their income stream. A real free market is simply not in Ubers interest, they would like the prices to stay as high as possible, basically what the market will bear.

loceng 11y ago
Followed by Uber eliminating drivers all together in the future, where possible, with self-driving vehicles. I have this nervousness, excitement, that would could see the biggest free fall in all of history for a company at some point in the future if they ever legitimately start abusing (that's what I would call it anyway) the relationship with the drivers.
- masklinn 11y ago
  > Followed by Uber eliminating drivers all together in the future Nah, having to own and maintain a fleet of vehicles would bring about similar issues. Uber wants driverless vehicles but they'll want to subcontract to fleet owners (or individuals), not to be on the hook for maintenance and legal issues.
  - arethuza 11y ago
    Perhaps Uber will turn into a franchise operation where you get a franchise, buy a few cars and a base somewhere cheap to store and clean them and you just send them out to earn money.
  - dexterdog 11y ago
    But there will be a much more consistent experience from a services that vertically integrates the whole thing. Some people will prefer that. I will prefer to have more than one transportation company in the future.
sharemywin 11y ago
also, the more steps you add to the process the more people drop off similar to an abandoned shopping cart.
halviti 11y ago
>If Uber allowed drivers to set their own rates that would initiate a 'race to the bottom' Not necessarily, it could easily go both ways as it would create a market for people that want to pay more for "better" drivers.. people with nice cars (teslas and generally expensive automobiles) just to be seen in them or to experience riding in them, drivers that pamper their clients with newspapers, in vehicle entertainment, free water, etc.
- jacquesm 11y ago
  You're right, it could go the other way. Note that Uber drivers protested the recent Uber price drop but Uber only drops the price to compete with other companies and does not care what happens to the drivers who are just a resource to them. So individual drivers may well increase their rates if they're left free to do so. But the biggest discriminator between getting a lot of fares and not getting fares will be price, not newspapers or free water and I suspect that the majority of the drivers would drop their prices in order to compete with other Uber drivers, rather than with other Taxi companies. This then takes away control from Uber over their revenue stream and would quickly erode the market. In countries where I've been where cabs were completely de-regulated cab rides were ridiculously cheap because of this effect.
- nols 11y ago
  Not many people would regularly pay more for a more glamorous taxi ride. Most people I know see it as a commodity, "This driver hasn't died in a car accident, good enough for me".
  - comboy 11y ago
    Then you can set an option to always choose the cheapest available driver (I think it would also work as a reasonable default).
    - y4mi 11y ago
      which makes it a race to the bottom again - reducing ubers profit
surge 11y ago
The issue for drivers is that the rates are too "low". That's not an issue with racing to the bottom. If it was an issue just set a minimum, or minimum cut Uber will take. Then Uber drivers won't drive for less than they're willing to. That solves that problem.

repomies691 11y ago

Sidecar is trying the different model AFAIK. I'm myself very doubtful that it would work well in practice - as a consumer I don't want to haggle the price in the ordering process, I just want hassle-free ordering experience with the constant price level.

mannykannot 11y ago

Uber's best interests are not served by creating a healthy market, its preferred outcome is a de-facto monopoly (see also Amazon.) Competition benefits consumers, but winning is what most benefits corporations.

HappyTypist 11y ago

That's what the surge pricing system is intended to do, to some extent. However, significant variance in pricing removes the reliability and consistency of the service. Designing a UI to allow the user to see the supply market and set a rate xyr's willing to bear would also be a nightmare. Surge pricing aims to balance the supply/demand curve and a consistent experience, resulting in more future rides.

morgante 11y ago

Because I want to be able to consistently know how much an Uber ride will cost. Particularly in emerging markets, one of the biggest appeals that Uber offers is that you don't have to compare prices and haggle with drivers.

totalrobe 11y ago

For one thing, the app experience would be significantly more complex for users because the consumer would need to choose between drivers based on pricing.