Why Uber Could Cost You 10% More Starting Today
Starting today, Uber will no longer offer a free version of its ride-hailing app for businesses, meaning many of its corporate customers will have to pay more.
Uber for Business launched in 2014, allowing employees to bill their rides directly to their firm’s corporate account (or their clients) at no extra charge. But after adding new features to the service last month, Uber will now tack on a 10% fee to all businesses using it.
Some companies had already been paying the fee for a “premium” version of the product, according to a person close to the car-sharing giant. A spokesperson for Uber, however, was not initially able to tell Fortune when the company began charging extra for the business feature, or how many clients were paying for it.
Two years ago, when Uber announced it had signed up 50,000 businesses for the program, including Goldman Sachs (GS), Bank of America (BAC) Salesforce.com (CRM), it did not charge them any additional fee.
In August, Uber beefed up its business travel program with new tools for employers, such as the ability to set rules — from the amount workers can spend per ride to the hours during which a car can be expensed — and to analyze and review employees’ trips. The new features build on Uber’s other enterprise product called Uber Central, which the company recently expanded to enable businesses to call cars on their clients’ behalf, and also to schedule and pay for future rides.
The person close to Uber said the company decided to begin charging all of its business customers 10% extra for the service because the majority of them had already started using the premium features, regardless of what they were paying for the product. Even companies using the free version of Uber for Business had been given access to the new features once they became available. Uber has been notifying those customers individually of the price increase, the person said. Here is an example of a message that was shared with Fortune:
This is just a reminder that as part of this new release, Uber for Business is becoming a premium service and we will no longer be offering a free version of the product….Businesses using our suite of services will pay a 10% service fee for rides taken on the organization’s account. As per our previous email, you have the opportunity to try the new Uber for Business until September 27, with no service fee. Beginning on September 28, rides taken on your account will be subject to a 10% service fee.
Rival ride-sharing company Lyft, which does not charge a fee for its similar enterprise product Lyft for Business, stands to benefit from the change as some of Uber’s business customers plan to switch to the cheaper alternative.
Still, Uber has a commanding lead in the corporate market, accounting for 55% of business travelers’ ground transportation expenses in the second quarter of 2017, according to a report by Certify. That’s up from 41% at the end of 2015, when Uber’s business product was still free for everyone. Uber for Business revenue tripled in the first half of 2017, the company said.
Lyft, meanwhile, has grown from a negligible share of the market to 8% last quarter, the same amount as traditional taxis. A Lyft spokesperson added that its own business program has grown 17-fold, or an average of 78% each quarter, over the same time period.
There is one way, though, that business travelers can keep using Uber and avoid paying the fee: Just use your personal Uber account with a corporate credit card as the payment method.