Uber cuts rates for second time in 4 months

Ride-hailing company Uber, the largest transportation network company operating in Southern Nevada, cut its rates for the second time in four months Wednesday for its basic UberX service in a bid to build volume and market share.

The company alerted its contracted drivers of the change Tuesday night and new rates became effective at 10 a.m. Wednesday.

Under the new rates, the base fare falls to $1.50 from $2, the mileage cost falls to 90 cents a mile from $1.10 and the time charge falls to 15 cents a minute from 20 cents a minute. The $1.70 booking fee, formerly referred to as a “safe rides fee,” remained the same and the $5 minimum fare and $5 cancellation fee also are unchanged.

An Uber spokeswoman said the new rates would result in an average fare from Summerlin to the Strip to fall from $25 to $21 and from the University of Nevada, Las Vegas, to downtown from $12 to $10.

While the move bodes well for consumers, drivers were angered by the switch because they are paid a percentage of fares. The approximately 20 percent rate cut may result in corresponding cut in pay.

But Uber officials say in other cities that have had similar price cuts the increased volume has more than made up for the per-trip revenue decline. The company also offered drivers to opt in to a two-week “hourly guarantees” program that would pay them $25 an hour if they agree to drive underserved hours — between midnight and 6 a.m. and from 4 p.m. to midnight on weekends and between 4 and 8 a.m., on Mondays.

Drivers would be required to be on the Uber platform for 50 minutes out of every hour, accept at least 90 percent of their ride requests and average at least 1.5 rides per hour to qualify. Drivers have until Friday at noon to opt in to the program.

An Uber blog post that discussed the company’s rate structure philosophy said that price-cut plans are experimental and that if they don’t succeed in generating more revenue, the increases could be rolled back.

“Higher demand means more time moving people, less time spent waiting around and more money for drivers,” the blog post said. “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.”

A Las Vegas Uber driver who requested anonymity said when he began driving for the company, he was averaging pay of $1,500 a week. When the company cut prices in December, the average fell to $700 a week.

“They’re (Uber) saying that it’s better for us and we’ll make more money,” the driver said in an email. “It’s a lie. We’re driving more and getting more rides, but we’re wasting more gas and making less money. How does this make sense?”

A spokeswoman with ride-hailing rival Lyft said the company plans to lower its rates by 18 percent on Monday. She did not specify specifically whether the new rates would be similar to those offered by Uber.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Find him on Twitter: @RickVelotta.