DoorDash’s New Tipping Coverage Has Elevated Driver Pay By This A lot

DoorDash’s New Tipping Policy Has Increased Driver Pay By This Much

DoorDash says its meals supply drivers make more cash because the firm, underneath stress, started giving drivers their ideas as a substitute of utilizing them to scale back its prices.

DoorDash stated on Tuesday that U.S. drivers now earn 12.5% greater than earlier than, citing an evaluation by consulting agency Beacon Economics that DoorDash paid for. Total, earnings excluding automotive prices elevated to $18.54 hourly in October from $17.24 in August, DoorDash stated. 

“This isn’t the place we cease,” stated Max Rettig, DoorDash’s head of coverage. “We’re going to proceed to investigate our personal information … and proceed maintain ourselves accountable.”

Earlier than the change, DoorDash paid drivers a flat charge, no matter how a lot prospects gave in ideas. For instance, DoorDash might have stated a a job would pay $10. But when a buyer gave a $9 tip, the corporate would solely pay an $1 out of it personal pocket. If a buyer’s tip didn’t attain the $10 minimal, DoorDash paid the distinction.

That mannequin, in keeping with DoorDash, was meant to ensure that drivers earned a minimal quantity. However the coverage upset prospects, who needed their tricks to function a bonus for staff reasonably than subsidizing DoorDash’s operations.

Beneath stress, DoorDash CEO Tony Xu relented in July, saying the corporate “didn’t strike the appropriate stability.” The brand new coverage rolled out a month later. 

Beneath the brand new coverage, to make sure Dashers wouldn’t earn much less because of prospects not tipping, DoorDash elevated the quantity it chipped in per supply. The corporate now pays $2 to $10 per supply out of its personal pocket to cowl the minimal cost. It beforehand paid $1 per supply and used ideas, if given, to fulfill the minimal. 

“DoorDash is paying extra out of the revenues we obtain,” Rettig stated. “However we’re assured that’s a great course for us as a enterprise.”

DoorDash stated it’s nonetheless working to scale back the variety of deliveries that pay drivers little cash.

In August, 5% of deliveries earned drivers lower than $three because of the quick distance, small period of time anticipated to finish the supply, and the job’s desirability. The corporate stated it decreased that quantity to 4% by the tip of October by growing pay for single, low-dollar jobs. 

With the brand new coverage, DoorDash additionally began letting prospects tip after the supply is finished as a substitute of solely letting them do it beforehand. The corporate stated that characteristic has now been rolled out to all prospects, however declined to reveal whether or not that it has resulted in elevated ideas.

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David Noman

David Noman

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