Can you catch more flies with honey than vinegar?* On-demand ride-hailing service Gett sure hopes so, and it’s sweetening the pot for drivers in New York City by offering them increased pay rates in an attempt to lure them away from the competition.
In September, Gett announced an unprecedented flat $10 fare for all rides within Manhattan, regardless of how far they were or how long it took to get a passenger to their destination. That was meant to boost its ridership in the city — at least through the end of the year — and it’s largely succeeded: Gett CEO Ron Srebro says requests have been up 3000 percent since the campaign began.
Now the mobile car hailing service is attempting to meet customer demand by hiring away Uber drivers. And to do that, it’s promising higher pay rates than what they’d receive from other services.
Gett is promising sedan drivers a rate of $0.70 per minute and SUV drivers $0.85 after sales tax, as well as whatever tips they might receive while driving. With the higher rates, Gett says drivers regularly working 40 hours a week can earn up to $110,000 a year, which isn’t bad.
In addition, it’s offering $500 for those who switch from Uber to Gett, as well as another $500 when drivers complete their first 20 jobs. The company also touts a free training course and is giving its drivers a tablet and data service for free.
Like Uber and other car services in New York City, Gett only works with licensed drivers. As a result, there’s a limited supply of drivers to go around for all the different services to work with, which has led to a contentious recruiting environment in that market.
Earlier this year, Gett accused Uber of a DDoS-style attack on its system by requesting and cancelling rides in quick succession. A few months later, Lyft accused Uber of the same tactics in an apparent effort to recruit drivers away from its platform. Later, Lyft claimed Uber’s recruitment efforts ultimately resulted in shorter average rides and lower earnings for its drivers.
By contrast, Gett is hoping the appeal of more money will led drivers to join its ranks. The promise of higher pay comes at a time of dissatisfaction among some drivers who see rates on services like Uber and Lyft continually dropping as the different ride-hailing companies engage in an ongoing price war.
That price war is being funded in part by huge investments that have been poured into the transportation market. Uber announced this summer that it had raised more than a billion dollars in its last round of financing, while Lyft had brought on an additional $250 million just months earlier. On that front, Gett’s parent company is also in the process of raising a $150 million round that is expected to close soon.
Gett will be using that funding to support its own efforts in the NYC price war, and the company seems fine with losing money on rides as it seeks to grow its user base in New York. After all, you can’t charge less than the competition and pay more than the competition and expect to make more money.
Then again while New York City is a battleground for Gett, it’s just one city in 24 that the company operates in. The company has a strong presence in markets like Russia and Israel, and offers both consumer-facing and enterprise services. While the focus is on winning over consumers in New York, Srebro says the company plans to bring its enterprise offering to the city soon.
And hey, since that’s on a completely different price structure with features like scheduling and pre-booking, that will probably help fund much lower margins on the consumer side. At least one would hope.
UPDATE: Uber issued the following statement in response:
Uber driver partners do more trips per hour than with any other platform – we’re so sure that we’re willing to bet on it by guaranteeing at least $5,000 per month for every driver through the end of the year. Uber IS the best economic opportunity for NYC drivers.
* I never understood why anyone would want to catch flies anyway.