Dynamic pricing benefits Uber but customers and drivers are worse off, study says

ITV News

a day ago

Analysis from Oxford University shows dynamic pricing benefits Uber at the expense of drivers and customers, as ITV News Business and Economics Editor Joel Hills reports
'It doesn't cost them anything to run this vehicle. They don't pay the fuel. They don't pay the insurance. I'm the one paying. So why do they get 40%?'
More than 100,000 people in the UK drive for Uber. Some of them, like Abdurzak Hadi, a veteran of 11 years, have spent their careers navigating London's streets.
Others share their experiences, good and bad, on social media.
'£300 a day, that's £10,000 a month… of course I'm rich,' said one driver on YouTube.
For many others, the reality of driving for Uber is different.
'It's minimum wage, it's less than the minimum wage,' said another.
In March 2023, Uber changed the way it calculates fares. Known as 'dynamic pricing,' the new system uses algorithms to adjust trip prices in real time based on demand, location, driver availability, and even the weather.
The price you pay is no longer just about how far or how long you travel. It's shaped by where you are, what time it is, how many other people are requesting rides, and how many drivers are nearby. If there's a surge, like after a concert or during a deluge, prices can quickly jump.
Uber says dynamic pricing helps ensure customers can always get a lift and that higher prices encourage more drivers to log on.
But a new study from Oxford University suggests this change came at a cost to drivers and customers alike.
Five academics at the University of Oxford's Department of Computer Science analysed 1.5 million trips by 258 Uber drivers in the UK between 2016 and 2024.
Their findings are stark. After the introduction of dynamic pricing:
The average customer fare per hour rose from £32.82 to £43.50
The average driver pay per hour, adjusted for inflation, fell from £22.20 to £19.06
Drivers are now spending an extra 23 minutes a day waiting for trips
Uber's income per driver hour rose from £8.47 to £11.70
Perhaps most strikingly, the study found Uber's 'take rate' - the share of each fare it keeps - has risen significantly. While the company used to take around 25%, the average has increased to 29%, with some trips seeing more than 50% taken by Uber.
'The thing that most surprised me,' said Reuben Binns, Associate Professor at Oxford's Department of Computer Science, 'was that the higher the value of the trip, the more of a cut Uber takes. So the more the customer pays, the less the driver actually earns per minute.'
I asked him if this could be considered exploitative. 'I think so,' he replied.
Hadi remembers when the company took a flat 20% of every fare and shared that information clearly.
Since dynamic pricing was introduced, Uber has stopped disclosing what fee it takes on individual trips.
When we compared what Uber charged us for the ride with what it paid Hadi, we found Uber's cut was nearly 40%.
After costs like fuel, insurance, and car rental, Hadi says he earns £10 an hour 'on a good day' - below the UK minimum wage.
'I feel cheated,' he told ITV News. 'My hard-earned money is being taken away from me.'
The Worker Info Exchange helped drivers obtain their journey data from Uber using GDPR requests.
The data was then passed to the team from Oxford University.
James Farrarr formed the Worker Info Exchange after his experiences as an Uber driver.
Several years ago, Hadi was one of the drivers who took Uber to court over employment rights and won. Today, he's a union member and says he's ready to fight again, this time over dynamic pricing.
'If you don't fight, you won't win. But if you do fight - there's a chance.'
He says Uber's strategy of encouraging as many drivers as possible to log on, to keep rides readily available, inevitably creates winners and losers.
Crucially, drivers aren't paid for the time they spend waiting between trips.
'We urgently need powers to cap the number of vehicles Uber is allowed to put on the road,' he told ITV News.
'And we need proper transparency from Uber about how drivers are paid.'
He added: 'We [also] need to end this kind of algorithm trickery. In dynamic pay systems, everybody's entitled to understand on what basis they're being paid, on what basis they're being paid, on what basis the work is being allocated to them.'
Uber declined an interview for this story.In a statement, the company said it 'does not recognise the figures' in the Oxford report and insists that all UK drivers receive weekly earnings summaries, "which shows exactly how much Uber kept across the past seven days'.
The company says its take rate 'does vary a bit from week to week and from one driver to another, depending on the trips they took,' but that 'the percentage kept by Uber has remained stable for several years.'
However, Uber did not specify what that average is.
Uber also says UK drivers collectively earned £1 billion in the first three months of this year and that the company's pricing model ensures a balance between rider demand and driver supply.
Uber was once seen as the original disruptor, making travelling by taxi faster, cheaper, and easier.
But its treatment of drivers attracted strong criticism.
In recent years, the company's reputation has improved, especially after Uber agreed to give drivers more employment protections in the UK.
But as dynamic pricing reshapes the experience for drivers and customers alike, new questions are being raised about fairness, transparency, and who's really benefiting.
The original bad boy of the gig economy is in hot water again.