Uber Drivers Will Soon Be Able To Solicit Tips

One of the selling points of Uber is that it’s cashless. That’s not only great for those of us who like to earn points, but just a general convenience for those of us who don’t like carrying cash around.

The thing is, Uber keeps lowering their rates in so many markets to try and gain market share, and at times I almost feel guilty taking Uber.

For example, a while back I wrote about how cheap UberX is in the LA area. It costs 90 cents per mile, which is a third the cost of a taxi.

UberX-Fares-LA

A ride from West Hollywood to LAX, which covers 13 miles over 47 minutes, costs ~$18.

Uber-Cost

I see both sides of this. Uber wants to gain market share, so they drop prices dramatically. Low prices are ultimately good for consumers. But I also don’t think these are “fair” prices, in the sense that I almost feel guilty taking an UberX at that rate. In other words, when the driver’s car is in horrible shape and they’re driving like a maniac, I sort of just shrug my shoulders and say “what was I expecting for 90 cents per mile?” The obvious counter argument is that people are choosing to work for Uber, so they don’t have to participate.

Uber just settled a $100 million class action lawsuit covering 385,000 drivers in California and Massachusetts regarding drivers’ classification as independent contractors rather than employees. Per MarketWatch, here are the implications of this lawsuit:

Under the terms of the settlement, Uber agreed to pay up to $100 million to these drivers in two states and revise its practice of deactivating drivers from the popular app without much warning or recourse. The company will also have to explain its decisions to terminate drivers, and in most cases must give warnings before removing drivers from the service. Drivers will also be allowed to post signs in their cars soliciting tips from riders.

To me the most interesting part is the last part, that Uber drivers will be allowed to post signs in their cars soliciting tips.

This has the potential to be a bit of a mess. The selling point of Uber is that the transactions are cashless, and they specifically say riders aren’t expected to tip drivers. If they were to introduce tipping, I’d much rather it be through the app rather than in cash.

This should get interesting…

I wonder what impact this will have on drivers’ scores… and in turn, on passengers’ scores.

How widespread do you think “tips appreciated” signs are going to get in Ubers? If you’re an Uber driver or passenger (or both), what do you make of this?

(Tip of the hat to View from the Wing)

Comments

  1. I have no problem with tipping Uber drivers but don’t carry cash, they really need to add it through the app like everyone else does!

  2. Is it a tip if the driver doesn’t know who gave it to them?

    Uber should do a reverse tip pooling of sorts. Rather than telling the driver how much each pax tipped, uber just aggregates all the tips .

    Allowing tips just gives uber an excuse to keep lowing fares

  3. Uber is a give and take. If a driver is harassing you for a tip you can also rate the driver poorly I guess. Would be some true schadenfreude for Uber I am sure to have to inform drivers they were let go because their customers were upset about their aggressive tipping pleas.

  4. Everyone tips taxi drivers correct? So why wouldn’t you tip an uber driver that’s providing you the same service at a lower cost? Most uber drivers go out of their way to provide a better driving experience (candy, water bottles, clean car), so if you have one of these pleasant rides then you should tip on the service. Not only that, but as earnings drop uber will start losing the better service providers and start recruiting lower service providers to drive passengers around. I do believe the tipping should all be done within the app in order to prevent cash transactions.

  5. Rate down a driver because they’re soliciting tips? I suppose if a driver actually asked me for a tip, I’d be uncomfortable. I’ve actually gotten a massage where I left a tip in the room and the therapist asked for a tip in the lobby… that irked me. But if they have some jar or sign that said “tips appreciated”, I’d have no issue with that.

  6. Lyft allows you to (optionally) add a tip in-app. I think it allows the driver to keep 100% of the tip, too. The driver doesn’t know whether or not you tipped them until the next day – so no pressure on you, the passenger.

    I’ve never understood why Uber doesn’t just copy this.

  7. Their rates aren’t “unfair” if people are choosing to drive for them at those rates and the passenger market will bear those rates. I’m curious Lucky – do you feel (almost) guilty flying low fares introduced by an airline to drive out competitors, get a foothold in a market, or gain market share? If not, why not?

  8. Kris…pretty messed up. I drive for Uber and only drive when its super busy because the drivers are working for ABSOLUTELY FREE after costs and tax. When its not surging. Short rides across town net us $2.64. Long rides out if the city look good as you may may make $20 but your not going to wait around forever hoping someone wants to go back into the city, so we drive double the miles

  9. Uber drivers also rate riders and that can influence how easily you can get an Uber. If the drivers know whether you tippee before they rate you, then you can get a 1 star for not tipping.

    Also @lucky. You should feel guilty for taking Uber. They are pricing their services below cost so it’s unsustainable and blatantly anti competitive. Do you ever wonder why investors would allow them to lose almost a billion in the first half of 2015? They do need to make back more than a dollar for every dollar they lose today and the only way is to hike prices and rip off consumers after they monopolize the market.

    You are supporting that.

  10. I take a lot of Uber and Lyft in LA. The UberX prices are too low. I now take Uber Select half the time. TBF its OPM. I have thought for a long time that Uber should have a process for tipping, similar to Lyft. That being said, Uber needs to build tips into the app, like Lyft. I don’t carry cash most of the time, and it just feels awkward. Hell, even in a Taxi I can tip through the system.

  11. In my opinion, the least interesting part of that ruling is the decision about the tips. Uber is part of a huge change in how many people work. Instead of being an employee, uber drivers are independent contractors who work from their cell phones. This model is taking off in other services, like delivery, and even home health care. Just like ‘blogger’ was a career that didn’t exist until a few years ago, this employment model is set to transform employment in many industries. I find this court ruling surprising. I am not sure whether it is a good thing or a bad thing. I know it will set back this new type of employment model a bit, but I think it will create some sort of hybrid model. Are uber drivers employees or independent contractors? Apparently, a little bit of both.

  12. I tip Uber drivers like I would normal cab drivers unless I had a very horrible experience. If I’m outside of the US, I’ll probably have small amounts of foreign currency that I wouldnt otherwise use anyway. I have had some Uber drivers refuse tips though.

  13. I wonder how ‘fair’ people think these price changes are on those drivers that signed the financing package on a car at a discounted lyft/uber price thinking they would be affordable if they make X pickups per day. But now that math is all f* because of the lower rates.

  14. I’m not sure if I understand. The idea is driver’s can now solicit tips and those tips would have to be in cash? If so, I guess I will go with a different service. I don’t carry cash (except maybe a large bill for emergencies) and I’m not about to start just so I can tip some uber driver. Hopefully if they are going to add tipping they will make it cashless and not reveal the tip to the driver until after the passenger is rated.

  15. Mark F, this is not a court ruling, it is a settlement the parties entered into voluntarily. They did it because each side thought they might lose in court.

  16. I would be happy to tip when I feel its justified, but it has to be via the App. Otherwise I’ll just use Lyft.

  17. The settlement also allows the drivers to form an association ( Union lite). The “Teamsters” announced that they are approached by Uber drivers for forming an association in some states. And the Teamsters are excited about it. Good luck to Uber and its riders… Tipping is going to be the least of the issues going forward.

  18. I don’t tip, nor would I ever with Uber. But recently I have noticed in Chicago and LA that the Uber drivers have been taking the long way to get to a destination, feels very much like a Vegas cab driver. Did only two rides with Lyft so far, but their drivers still go (so far) straight to the destination and don’t take “shorter ways” to make more money.

  19. If I start seeing “tips appreciated” signs, and the drivers expect to be tipped in cash, then I’m going to stop using Uber. The reason I use Uber in the first place is because I don’t carry cash, and I’m not about to start carrying some just for that purpose. If Uber wants to start letting its drivers take tips, fine, but it needs to be done through the app, and the amount of the tip shouldn’t be disclosed to the driver until after he or she submits a passenger rating. Otherwise, I’m switching to Lyft. I guess the question, though, is whether these signs are going to be allowed in only CA and MA, or nationwide?

  20. A much more user friendly policy for Uber would be to adopt the policy of Lyft that allows you to add a tip through the app when rating the driver following the trip. I almost always tip $5.00 on the average under $25 fare and appreciate being able to do this without using cash. No doubt when using Uber in California I’ll give a cash tip, I suspect I’ll be using Lyft more frequently.

  21. If you are now expected to tip Uber drivers in cash, that completely negates the whole point of using it for me. I will try Lyft instead since you can add a tip in the app.

  22. Part of Uber’s allure (besides the prices) is not dealing with the usual taxi BS. I’d rather they raised their prices than introduce tipping.

  23. I tip Uber drivers about 95% of the time because I enjoyed a better environment and conversation than I normally would have had in a cab. Yes, I’ve also read the economics and, yes, the drivers choose those economics, but I also believe that tipping them might help keep those persons who have provided a great experience on the road as uber drivers. Thing is, Uber already has tipping built into the app, it’s in your account settings, but only applies when you are in a cab that is logged into the uber network–at least, last I checked into its functionality. Give us cashless tipping, yo!

  24. I’d like for Uber to pay their drivers more (or at least stop decreasing their payouts), and I’d also prefer for Uber to remain a no-tipping service.

    I may well dock tip-soliciting drivers a star to help discourage the practice (though I think giving a 1 star rating is going too far, personally).

    What kills me about all of this is that it’s clearly a lose-lose change. Compensation will essentially hit an equilibrium, whereby Uber will simply adjust payments down as passengers offer more tips. Drivers will earn the same. Passengers will be inconvenienced and feel more uncomfortable and awkward about their rides and some (like me) may even take Uber less often.

    Of course, in 10 years when we (hopefully) have self-driving cars, all of this may be moot. Until another 10-20 years, when the robots begin demanding gratuities…

  25. And that is why I use Lyft. I never carry cash and I tip. Lyft allows me to add tip within the app

  26. This is a load of horseshit. Felling guilty for taking uber? WTF? Either a business makes money or they close – if Uber doesn’t charge enough, that’s and Uber problem, not mine.

    I take Uber because it’s cashless. If drivers want a tip – they should all stop driving until Uber put’s a freaking tip feature in their app…

  27. FFS just say no. Get rid of this stupid tipping culture and just pay folk appropriately for the job – it’s not like it gets you better service anyway, just a pissed off server/driver/bellman if they don’t get some ludicrous 20% amount that they expect…

  28. In the app if you are logged in, under payments, there is a tipping option. But not applicable to Uber Black, SUV, or uberX. What? I don’t understand.

    “Your preferred gratuity will be applied to any future TAXI trips that you request through Uber. This will apply to TAXI fares only (not Black, SUV, or uberX) and be paid to your driver. Gratuity only applies in certain countries.

    TAXI Gratuity
    10%

    Save”
    There is a drop down where you can choose the percentage.

  29. I never tip drivers and I won’t tip any Uber driver. As I always say add whatever tip to the regular price and let me decide if I want to pay that price.

  30. I am sick of Uber drivers complaining about how shitty it is working for Uber and how little money they make.
    Get another job if you are unhappy with the situation…

  31. What I don’t understand is this aversion that people (mostly North Americans) have to carrying cash. I find cash to be very convenient. And it’s not difficult to obtain or carry. Sure, we all like our credit card points, but aren’t you taking this a bit far to “never” carry cash? Cash has helped me out of a jam more than once while travelling.

  32. @David “Everyone tips taxi drivers correct? So why wouldn’t you tip an uber driver that’s providing you the same service at a lower cost?”

    Well yes, but only under duress… In fact the only time I’ve wanted to tip (a nice Uber driver who took me out of town beyond Uber coverage – so I knew would be driving back a fair distance empty) they refused to take it!

    Like many non-natives, the standard procedure in the US where you pay people too little to get by leaving them to solicit charity from the customers is horrifying to me (and wholly unworthy of a supposedly developed nation) so I love that my Uber rides don’t involve having to work out an appropriate donation. Even if that means the fare is going to be $5 higher when I would have only tipped $3. It’s basic human dignity!

  33. Can the uber driver cancel the job if the passenger is upfront about not having cash and makes a policy of not tipping?

    I’d rather start the relationship on an honest footing and not have to play all these games and deal with the consequences on one’s ratings.

    If drivers think they don’t get paid enough and require tips then they should reconsider contracting for uber. They’re not in bonded servitude. They don’t have to drive an uber service.

  34. The vegas uber that I took yesterday had a “Tips are appreciated” sign in his car. I don’t usually tip an Uber as that is the main reason I like it (the convenience of not having to have cash) over the cost.

  35. I drive Uber part time here in Seattle. It’s a convenient way to make extra money. The economics work well for me given the sunk costs of my leased car and that I’m way behind on allowed miles.

    I won’t solicit tips, but I’m appreciative when I receive them. I’m also an independent contractor, and will make decisions on how I want to work with Uber. For example, I’ll wait from my home for the first ping to get started, and if I see one that is 12 minutes away at a certain time of day, I’ll ignore it with the experience that it will be a short ride and not worth my time.

    I’ll also ignore uberpool calls (unless there’s a surge), because it’s less money for me that a regular UberX request. I once got a ping for someone a minute away, and once I saw she had her groceries with her, I canceled and moved on – she’ll only want to go a few blocks. It’s insulting. Fucking lazy millennials.

    The marketplace will eventually find the right price point for the market to survive. If it’s too low, it makes little sense for drivers (and results in massive churn as drivers realize they don’t make money after costs given the low fares); if it’s too high, then you lose demand.

    I don’t feel anyone has to tip for any Uber ride. I read on driver forums on how many drivers seem entitled, which is ridiculous.

  36. Thank you @Seattle Eric.. finally we have the scoop from the “other” side of the discussion…

  37. It’s a slippery slope I think.

    I drive for Uber and will definitely agree that fares have become so low, it sometimes feels that I’m actually spending money driving for them.

    One thing to keep in mind; Uber has advertised there’s no tipping required because it is “included” in the fare. That is very very misleading. Base fare + per mile rate + per minute rate + city ordinance fee + safety fee. That’s the breakdown. The city ordinance fee and the safety fee is taken out of the amount passengers pays right away. From the total of the base fare + per mile rate + per minute rate, between 20 and 25% is deducted from by Uber for their fee. Balance goes to the driver.

    I fully support tipping. After all, we live in a culture where tipping is a norm. I however DO NOT support cash tips. The point of Uber is to have a cashless system. I would much rather have Uber build in an optional section for passengers to leave a tip if they wish to.

  38. When you work in a industry regulated by service norms. The customer always wants to feel like they are always right. They also don’t like being told what they can or can not do. When it comes to there being a choice. Seems like Uber won’t allow consumers the choice, which is where it should be. If the fares are that much less then those drivers really need that support from those who care.

  39. This is why I take Lyft and why I tell everyone I know to take Lyft. Uber is just doing it wrong. They don’t need to be 1/3rd the price of a cab, but they think it’s the solution to bankrupt every taxi company out there. People would take Uber is it was 80% the cost of a taxi. It’s a better service, usually quicker, and just a better experience compared to a cab. But to me, Lyft is even better.

    The biggest issue with the low-low fares is the high driver churn. I’d love to know what the turnover rate is. I hear ad’s on lots of different stations about driving for Uber. They are building an unsustainable model where no one makes money.

    As far as tips go, put it in the app and let the consumers decide. But to not allow it at all, and even saying it’s not necessary or built into the rates is just stupid.

    Use Lyft!

  40. Also, don’t make the assumption that just because the fare is low, the drivers are making less in that market. I’ve heard, to gain market share in a city, Uber the company, will operate at a loss in those markets in the hopes that they will be able build a loyal customer base and then, I assume, raise the cost. I want Uber to pay a fair wage and not have tips be in the equation, myself. That’s one of the things I like most about it. Also, if they don’t pay a fair wage, there will be less drivers and they will have to change. Don’t do their job for them.

  41. That driver in the P4P commercial is scary. He struggles with sun in eye but neither folds visor dow nor puts on sun glasses– just bopping his head around to find a shaded area away from the ray of sun. And that chewing gum is just annoying.

  42. I am driver in Raleigh, NC and I barely make money without a decent tip. If you tip a pizza boy for driving your pizza, shouldnt you tip the uber driver who is driving you to the airport? Or driving your kids home from school.Or being the communal Desegnated Driver at 2am in the morning. Common Uber, end the madness and add it to the app!

  43. Alex, you really expect Uber to add this to the app?

    For all I know, they are out there to become big in any way possible (including stiffing their drivers.)

    Just got stiffed by at least $20 by them. No remorse, no sorry, no fixing.

    Adding the tipping option is a fantastic idea but truly for a company as unethical as Uber, it’s too much to ask for.

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