Nov 12, 2019

DoorDash claims its new pay model increased courier earnings

Photo: Smith Collection/Gado/Getty Images

Food delivery company DoorDash says an outside firm, Beacon Economics, has completed a preliminary analysis of courier earnings under its new pay model, and found they're earning more — 12.5% more per work hour.

Yes, but: The company has only analyzed earnings for the last month under its previous pay model (August) and the first full month under its new model (October).

Flashback: A few months ago, Doordash was heavily criticized for having a pay model similar to the "tipped wages" that service workers like waiters are subject to in many states — meaning, that it counts customer tips as part of the "minimum" earnings quoted for deliveries.

  • Some customers complained that they felt duped to find out tips weren't extra on top of the couriers' earnings.
  • Under the new model, DoorDash assigns a minimum it will pay for each order based on factors like time, distance, and desirability instead of a flat $1 fee.

What they're saying:

  • DoorDash says that overall earnings (including tips) increased from an average of $17.24 per active hour in August to $18.54 per active hour in October.
  • It also says that in the last couple of weeks it has worked to decrease delivery jobs with guaranteed earnings of less than $3 from just over 5% to under 4% of all orders — something that couriers had complained about under the new pay model, according to Gizmodo.
  • A spokesperson added that "on average, the amount that Dashers see when they’re offered a delivery is higher under our new model because the amount that DoorDash pays has increased." This sometimes includes tips, as customers can choose to include them before checking out.

Be smart:

  • Higher hourly pay can indicate that drivers are taking more gigs each hour. DoorDash head of policy Max Rettig tells Axios that the higher earnings are due to an increase in what the company pays couriers rather than an increase in productivity.
  • Rettig also says that there's been no change in bonus pay that would force couriers to decline fewer deliveries. In fact, the company has removed the minimum requirements for bonuses during high-demand hours, he tells Axios. (However, an upcoming optional rewards program for couriers will factor their acceptance rate for delivers.)
  • And while Rettig says there's no data that suggests that deliveries with low base earnings tend to get smaller tips from customers, it wouldn't be surprising if some couriers assume that will be the case and are less than thrilled to take those jobs.

The bottom line: This report only looks at a short time span, so any conclusions are highly preliminary. The company says it will continue to analyze courier pay over time.

Go deeper: How DoorDash's new payment scheme is playing out (Gizmodo)

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