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Uber CEO says ride prices could drop after 3,300 layoffs

Between corporate layoffs and lower insurance costs, riders could end up the winners in the form of lower ride prices. ©Image Credit: Unsplash / Viktor Avdeev

With prices rising almost everywhere, it's rare to hear about a company lowering prices. That is exactly what Uber's CEO is teasing though, as it lays off 10% of its corporate workforce, which equates to about 3,300 people.

Lower ride prices may eventually happen

Uber offers a convenience that plenty of people have used, but it's not exactly "cheap". The tides could be turning, and you may notice your next Uber ride has gone down in price.

Uber's CEO, Dara Khosrowshahi, has cited job cuts as a potential factor that may lead to lower ride prices.

"We are going to take the savings there and essentially reinvest it back in the business, lowering prices, improving selection, and continuing to invest in our growth program," the CEO said during a presentation at the Goldman Sachs Communacopia + Technology Conference last week.

Lower insurance costs also a factor

The savings for Uber didn't stop with the layoffs. Khosrowshahi also said Uber is enjoying lower insurance rates, and the plan is to use those savings to reduce ride prices.

Insurance costs are one of the highest expenses for ride share companies. Uber is banking on these two money-saving moves to encourage people to keep using the app, and keep using Uber.

The company also saw a bump in its stock last week, going up 2%. This was after an SEC filing that showed Khosrowshahi added $10 million in his Uber stock holdings.

The company was in a position of "strength"

In explaining the company's decision to lay off 3,300 people, Khosrowshahi said it was because Uber was operating in a "position of strength versus weakness."

He also said that the company didn't see a need to wait and instead took action.

Riders may win here

This is a rare case where the consumer may come out the winner. The next time you order an Uber, you may be in for a pleasant surprise in the form of lower prices.

Sources: Yahoo!Finance, Business Insiders

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