Effects Of Lowering The Fares For Uber Drivers

Uber partners and drivers are likely to experience the effects of a recent move by the car-service company to cut fares right across the board in 48 U.S. cities. Commentators are on both sides of the fence regarding whether or not this is a move in the right direction. Forbes magazine for example considers it a clever move that may result in Uber retaining or locking in its drivers. Other commentators have mentioned that this is likely to harm and help Uber drivers as they are independent contractors and not employees. Here are some likely effects of lowering the fares for Uber drivers:

1. Drivers can earn more, but at a higher operating cost

It is true that the recent reduced rates can result in Uber drivers earning more — as Uber suggested when they made their announcement. However, in order to earn more, these drivers will have to drive more. In other words, drivers will have to increase their mileage, and do so at their own expense. Drivers, on account of the fact that they are contracted workers and not employees entitled to certain benefits, will have to pay for their own vehicular maintenance as they put in the extra mileage. This maintenance includes fuel, car payments and car insurance.

2. Influx of new customers

Another likely effect of the fare cut is how attractive the new rates will be to commuters when compared with Uber’s biggest competitor Lyft. Consumers are always looking for the best deal. Therefore, it is likely that with these newly reduced fares, that many commuters and prospective customers to feel that they are indeed getting the best deal available. Perhaps, this is also another avenue through which drivers will be able to earn more as they will indeed be driving more as new customers flock to Uber.

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