delivery pricing

Uber Eats, Postmates follow DoorDash with tiered delivery pricing structures

Uber Eats and Postmates have followed the example of DoorDash by implementing their own tiered delivery pricing structures amid a continuing conversation over the validity and morality of delivery modes during the pandemic.

The two delivery services this week announced new tiered delivery pricing that sees them offer 15 per cent, 25 per cent, and 30 per cent fee plans. 

This comes after DoorDash announced an overhaul of its own model in April that introduced three new pricing models along the same percentage lines. Grubhub also offers tiered commission plans.

Uber Eats had begun testing new fee offerings in late 2020 based on feedback from partner restaurants, and the platform’s new pricing was created with input from thousands of U.S. operators, said Sarfraz Maredia, vice president of U.S. and Canada for Uber Delivery. Previously, the service had charged a single uniform fee to partner restaurants, which included the costs of onboarding new delivery couriers, paying couriers, insurance and personal protective equipment, marketing, technology services, and customer service for partner restaurants.

The delivery giant has also adjusted its merchant contracts to allow restaurants can now list different menu prices on the Uber Eats app than they do at the restaurant.

Uber Eats’ 15 per cent “Lite” plan is designed for restaurants that are interested in low-cost delivery fulfillment. This tier includes higher delivery fees for diners, and doesn’t include advertising or promotion for restaurants, as well as restricting restaurants’ visibility to direct searches in the app.

The two higher-fee plans include reduced delivery fees for consumers, increased visibility on the Uber Eats app, and Uber pass benefits.

The revamping of delivery pricing models is an evolving trend that has stemmed from the criticism of third-party delivery platforms and their commission fees, which typically average at about 30 per cent, during the pandemic.

It may also be an attempt at damage limitation as jurisdictions such as New York and San Francisco have introduced permanent 15 per cent fee caps while many Canadian and U.S. jurisdictions have enacted temporary caps during the pandemic.

Meanwhile, Uber Eats is currently a plaintiff in a lawsuit challenging New York City’s permanent cap.

There could also be some benefit on the restaurant side as allowing operators to scale up or down could feasibly help smaller restaurants that rely on third-party apps as a solid revenue stream.