Beating the Winter Slump: Price Cuts for Riders and Guaranteed Earnings for Drivers
2015 is done and dusted. It’s January, and for most people that means bad weather, staying in, and saving money. Yes, seasonality affects every business, and Uber is no exception because when people hunker down at home, demand for rides drops. Fewer trips are tough on drivers, many of whom want to save money and pay off their holiday credit card bills now that January is here.
Five and a half years in, we’ve learned that the single most effective way to boost demand during the winter slump is to cut prices for riders. Starting tomorrow—just like last year and the year before—we’re cutting prices in more than 100 US and Canadian cities, giving riders one more reason to head out of the house, ditch their keys, and avoid parking.
Higher demand means more time moving people, less time spent waiting around and more money for drivers. And if drivers aren’t busier, prices will go back up again. In addition, we are guaranteeing earnings for drivers to ensure that no one is disadvantaged. That’s 24/7 incentives to put drivers at ease.
For some cities this is the third year in a row we’ve cut prices to fight the January blues. Driver earnings in those cities continue to rise year after year.
Of course, it doesn’t always work as we had hoped. Last year, for example, earnings fell in some cities and we changed back. In Charlotte, for example, we pulled a 40 percent price cut back to 29 percent, and earnings for drivers grew by nearly 20 percent in 2015. And in two cities, including Seattle, we ended up reversing the price cuts entirely when it became obvious that prices were already low enough. Earnings have remained stable since.
While pricing is a science, every city is different: different economic circumstances; different regulations; different competition. We’ve learned over the years that we do best when we test new things. With each new test—small or large—we learn more about the choices riders make, and how those choices impact earnings for drivers.
So no matter where you are headed this year, we hope you’ll let us take you there. Our goal for 2016 is simple: better, smarter way of getting from A to B that saves riders money and increases earnings for drivers.