Uber cuts prices in 48 US cities but says its drivers will be paid more

9 Jan 2015

E-hailing app Uber has announced it is dropping prices in 48 US cities but claims the cuts will lead to drivers actually being paid more than they are currently.

The news has been announced in a blog post outlining the adjusted model that the company says will increase driver demand, leading to more trips every hour and more earnings for every hour on the road.

The price changes are being rolled out today (9 January) in all 48 cities, including San Antonio, Detroit and Cleveland. Uber has also pointed to recent price drops in New York and Chicago and are ‘guaranteeing’ that drivers in cities with price cuts will make more money from its service.

“At Uber we’re always looking for ways to deliver lower prices to riders to make Uber an everyday transportation option. In the last year, our largest cities have seen price cuts to deliver on that promise,” wrote the company.

“In the past, Uber has implemented price cuts without a guarantee for drivers. However, this time around, we’re trying a new approach. We’re so confident in the earnings gains drivers will see that we’re making earnings guarantees in every city where we’re cutting prices. We feel that it is important for drivers to have this kind of certainty and comfort going into a price cut.”

The firm has also released a graph that charts the reduction in the average Uber taxi fare in Chicago and increase in how much drivers make per hour.

“We expect that these seasonal price cuts will help bring newer Uber markets in line with our larger ones with lower costs for riders, higher earnings for drivers, shorter wait times for both, and a better experience for all,” the company added.

Battling controversy

Uber may very well be on the charm offensive following a string of controversies and negative headlines that have surrounded the US$40bn-valued company.

The alleged rape of a woman in Delhi by an Uber driver in December saw the city ban the app, with countries such as Spain and The Netherlands following suit.

In addition, San Francisco district attorney George Gascon revealed he had joined his Los Angeles counterpart in filing a lawsuit, accusing Uber of “making false or misleading statements to consumers and for engaging in a variety of business practices that violate California law”.

“Uber has refused to comply with straightforward California laws that protect consumers from fraud and harm,” Gascon and Los Angeles County district attorney Jackie Lacey said in a statement. “These companies can be innovative in the way they deliver services without ignoring the laws that protect the public.”

Uber image via Shutterstock

Dean Van Nguyen was a contributor to Silicon Republic