Should Uber add a tipping option to its app? (Image: Uber)
Ride-hailing giant Uber is no stranger to controversy (just ask any licensed taxi driver) but now it is enduring a couple of new headaches courtesy of Harvard Business School – one in the form of an article blasting its new tipping confusion, and another in the form of a pricing comparison app created by students there.
As we reported a couple of weeks ago, in its recent settlement of a class action lawsuit filed by its drivers, Uber agreed to let riders know that tips are not included in the fare, and to let drivers solicit tips by putting up a sign in their car or just by asking for them. Uber maintains that this has always been its policy, and said it still will not include a tipping feature in its app.
But Uber is taking fire for that stance from an article in the latest issue of the Harvard Business Review, which carried the headline “Uber’s new tipping policy is a mistake.”
Author Rafi Mohammed, described as a pricing strategy consultant, said that Uber’s decision not to add a tipping feature to its app — instead requiring customers to use cash or a separate credit card transaction if they want to tip a driver – “puts Uber at a significant competitive disadvantage. In addition to the inconvenience of the extra step, which will require business travelers to collect multiple receipts for expense account reimbursements, many riders will feel pressured to be overly generous in the amount they tip.”
That pressure is created by Uber’s driver and passenger rating systems, because drivers will know before they rate a passenger whether and how much that person tipped them, Mohammed notes, adding: “Customers never enjoy being strong-armed over a gratuity.”
He said the “easiest remedy” is for Uber to follow Lyft’s example and allow tipping through its app. “However, if Uber is intent on maintaining its no-tipping policy, it should find another method to reward highly rated drivers,” he added.
Meanwhile, Uber is fighting to block a group of Harvard Business School students from displaying its prices in a new app they created. The app, called Urbanhail, lets users see and compare the price of a trip on different ride-sharing services and taxis before they request a ride. It’s currently available only for Boston, and the group is offering free downloads through the end of May.
Reporting on the spat, The Boston Globe noted that Uber’s terms of use bar app developers from displaying its rates alongside those of competitors, but the students said that their professors encouraged them to move ahead with their plan anyway – just as Uber has often started operating in cities that haven’t authorized it to do so.
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No problem Uber will re adjust the fare based on the estimate if you want to. I found the Uber to be cheaper, since you are not expected to tip.
Uber is a nightmare in NYC. The estimates are wildly inaccurate, and it is a huge time sink trying to get incorrect charges straightened out with the overseas call center workers. I love Uber in Atlanta or Fort Lauderdale, but in NYC where taxis are cheap and priced low, Uber is very expensive.
Simplicity of transaction (automatic charge to credit card with no tipping) and an often lower cost vs a taxi is one of the reasons I use Uber. Feeling pressured to give a tip is certainly a deterrent; might as well take a cab in areas where they’re just as readily available.
They got a price estimate function for uber… and lyft will almost cost the same
The first time I used Uber was in NYC from Brooklyn to JFK. When I arrived in NYC I didn’t use Uber or Lyft at all because I had no idea 1) how much it was going to cost (or a close proximity to it) and 2) how or if to tip which I don’t mind for good service. With a cab I have a fairly good feel how much a fare will cost. This is a issue (#1) that pushed me away from Uber and Lyft and drives me to car services and cabs.