How DoorDash’s New Payment Scheme Is Really Playing Out

How DoorDash’s New Payment Scheme Is Really Playing Out

Would you run an errand for just two bucks? How about $4? Maybe $6? These are the questions many delivery workers for the American courier service DoorDash say they now face after the company instituted a new pay model paying out as little as $US2 ($3) per job—a system that was meant to replace its previous, predatory wage model. And thanks to upcoming changes to the company’s reward program, frequently working for scraps may be some dashers’ only option.

Back in August, amid ongoing backlash, DoorDash CEO Tony Xu announced in a blog post that the company would finally bend to public pressure over its controversial tip-skimming model. Xu claimed at the time that after a wide rollout of this new system in September, dashers would earn higher wages on average. But dashers who spoke with Gizmodo after Xu’s proposal for the overhauled pay model said that they worried that the range for base pay per dash—from just $US2 ($3) up to $US10 ($15), according to Xu—could potentially reduce per-delivery earnings. And even though the system began rolling out to dashers in September, the jury’s still out.

What’s clear, however, is that even under a system ostensibly intended to better pad the pockets of DoorDash’s delivery workers, pinning down exactly how DoorDash determines who makes what is still largely a mystery. Three current dashers who spoke with Gizmodo on the condition of anonymity to protect their jobs—as well as dozens of dashers in private and public forums—say that since getting the new model update, they’ve seen a wave of $US2 ($3) or $US3 ($4) orders in place of minimums that used to be as high as $US5 ($7) or more. Those dashes, which represent some of DoorDash’s new per-dash payouts, hardly cover gas let alone rent.

Multiple dashers told Gizmodo that they’ve become more selective about which orders they choose to accept in order to boost their wages. But DoorDash has begun testing methods that appear designed to drive dashers toward lower-paying orders by stripping them of perks if they don’t accept enough of the chaff that comes their way.

Based on interviews with several current and former dashers as well as internally distributed correspondence about its new system, it appears DoorDash would rather devise seemingly intentionally convoluted wage models and potentially manipulative systems than simply pay its independent contractors a living and reliable wage for their labour.

If you’ve ordered through DoorDash before, you’re probably familiar with the tipping system baked into the app. On the checkout screen, users are prompted either to tip with a pre-filled dollar amount or, in some cases, a percentage of the total. (Customers can, however, manually enter “0″ to leave no tip or tip in cash.) Under DoorDash’s old system, and depending on whether and how much someone tipped, the company could get away with paying its couriers as little as $US1 ($1) per order while customers’ in-app tips paid the remainder of workers’ promised wages.

Here’s how DoorDash managed to pull off its old scheme: If the promised amount for a particular dash was, say, $US7 ($10), and a customer tipped $US5 ($7) on the order, DoorDash would apply that tip toward the promised wage and pay the difference, just $US2 ($3). So, while the dasher did, technically, get to keep 100 per cent of their tips, as the company messaging went, they also dictated how much DoorDash was on the hook for in terms of per-delivery payouts and limited the ability of dashers to earn tips on top of what DoorDash paid them.

Dashers regularly lamented their frustration with this system through public and private channels, particularly as many customers seemed unaware that their tips were making up a part of a worker’s wage rather than supplementing it. After all, when customers tip, they reasonably assume that tip is something extra that the worker will earn in addition to—rather than instead of—their base income.

According to Xu, DoorDash’s new wage model would be made up of a base pay—the guaranteed amount DoorDash would pay for the delivery—customer tips, and any promotional bonuses (like “peak pay,” a bonus paid to deliver during specific hours, or so-called “challenges” like earning a “top dasher” distinction). With regard to tips, the new model would include them in addition to base pay rather than in place of any amount above $US1 ($1.5).

The range in base wage, from $US2 ($3) up to $US10 ($15), would be determined based on various metrics like delivery duration and “desirability,” according to the company. Xu said in the August blog post that deliveries “that are expected to take more time, that require Dashers to travel a longer distance, and that are less popular with Dashers will have higher base pay.”

DoorDash’s example of how the new payment system breaks down. In this case, the base pay is $US3 ($4), with a $US1 ($1.5) peak pay bonus and a $US3 ($4) customer tip. (Image: DoorDash)

Notably, Xu said that under the new system, “base pay from DoorDash to Dashers will increase.” But given the fact that in many cases DoorDash was paying a mere $US1 ($1.5) of its own money to its couriers, depending on what the customer tipped, even a $US2 ($3) payout per delivery would technically be a 100 per cent increase from what it was paying its workers for many deliveries under the old model.

But Xu also claimed that under the new system, DoorDash workers would “earn more money on average—both from DoorDash and overall.” In recent emails to dashers reviewed by Gizmodo, DoorDash said it would be “working with a third party to validate this,” though who or what that third party might be was not stated by the company and DoorDash did not respond to Gizmodo’s request for clarification.

Current and former dashers who spoke with Gizmodo following the announcement were understandably sceptical about these lofty assurances of more money. One dasher said that while the promise of a new and improved pay model looked good on paper, he was “waiting to see what kind of tricks they’re going to pull.”

This dasher told Gizmodo that he worried that in his market, where the estimated average base wage was around $US4 ($6) or $US5 ($7) per dash, he would see his normal earnings halved to $US2 ($3)—a wage that hardly justifies gas in the event that a customer doesn’t tip or tips poorly. Plus, due to the nature of the work, and because they are independent contractors, dashers also need to consider additional costs like wear and tear on their vehicles, insurance, and other expenses.

One former courier for the company, who spoke on the condition of anonymity to avoid jeopardising his other gig work, said that while the announcement seemed like “a step in the right direction for DoorDash to pay drivers to do the job they were assigned, it would be foolish to think that these changes stem from DoorDash’s desire for altruism.”

In late August, shortly after the publication of Xu’s blog post, Gizmodo reached out to DoorDash to ask who this supposed hike in earnings would apply to and whether it would take effect in every market. Gizmodo also asked how the company defines “on average,” as one former DoorDash worker on the corporate side told Gizmodo earlier this year that the company has in the past fudged “averages” for earnings by using a small pool of data to represent a larger population in its ads for dasher jobs. In a statement by email, a DoorDash spokesperson told Gizmodo the changes “will apply to all Dashers, across all markets.”

“We expect the new model to have greater variability so to offset this, DoorDash is increasing the amount that we pay on average through base pay and bonuses,” the spokesperson said. However, dashers who have received the new pay model in their area told Gizmodo this is not necessarily the case.

One dasher in the St. Louis market who’d had the new system for weeks when we chatted described the first day of dashing with it as “extremely rough,” with orders of mostly $US2 ($3) and $US4 ($6). Under the new system, and until customers are able to tip in-app after their order is placed—which they cannot currently do despite the company promising this feature, according to dashers who spoke with Gizmodo—the number shown to dashers when they accept an order generally represents the total of what they’re getting for that dash. (Unless, of course, a customer tips in cash.)

“It was not a good first day,” he said. He added that it’s since gotten better, and fewer of those bottom-of-the-barrel $US2 ($3) or $US3 ($4) dashes have been surfacing while he’s on shift. But he’s also found that cherry-picking is key.

This dasher said that before he received the new system, he had an acceptance rating—the percentage that represents how many orders a dasher accepts and how many they pass on—of just under 50 per cent of prospective dashes. But by the end of that first day with DoorDash’s new wage model, he said his acceptance rate dipped to around 28 per cent. While dashers on Reddit have in the past said that the acceptance metric for dashes is essentially meaningless, this dasher is uncertain about whether a bad rate could affect the kinds of dashes he’s offered, and DoorDash did not return a request for comment about whether a dasher’s acceptance rating has any influence on the frequency or quality of the jobs dashers are offered. However, a beta rewards program that will soon factor in acceptance rates may prove highly consequential for dashers’ earnings.

Dashers in a private support group who have tried the new system seemed split on whether they love it or hate it, but those who seem to like it say that rather than accepting $US2 ($3) to $US4 ($6) dashes, they instead decline low-paying dashes until a better one comes along, thus earning higher guaranteed pay while causing their acceptance rate to plummet.

One dasher in the East Valley Phoenix market who’s been with the company for years says he’s watched a gradual decline in expected earnings over the time he’s worked for the company. He estimates his average expected earnings had fallen by about 50 per cent.

Immediately after getting the new pay model in his market, however, he said he could pull in anywhere from $US7 ($10) to as high as $US17 ($25) per dash, a significant jump from dashes that averaged around $US5 ($7). Like the St. Louis dasher, he says he rejects orders with a low base pay in favour of waiting for something better to come along. He says his acceptance rating, too, has dropped under this model. But it impacts customers who tip with cash, rather than through the app, too.

If dashers are mostly rejecting low-paying dashes or those for which the customer has not added a tip at checkout, or for which the tip is $US1 ($1) or less, who’s going to bring them their food? (DoorDash didn’t respond to questioning about whether it eventually boosts pay on a dash that is repeatedly rejected.)

“It’s really hurting those customers who are used to [tipping] in cash,” one dasher said of the new system. Two dashers morbidly joked that some customers will starve.

Part of the way that DoorDash may be able to persuade otherwise wary dashers to accept dashes that pay scraps might be with its new beta program. In addition to the new pay model, DoorDash has also introduced a new program called “top dashers.” The designation is earned through “Dasher Rewards,” a program available in some markets that DoorDash describes as a way “to recognise and reward our best dashers” who demonstrate superior customer service and order completion.

To become a top dasher, couriers must meet certain criteria by the last day of each month, with reward perks applied the following month. In September, those qualifications included a customer rating of at least 4.70 (out of a perfect 5), at least 200 to-date deliveries, and 100 completed deliveries during the prior month. Additionally, dashers needed to maintain a completion rate of 95 per cent. (Completion rates are different from acceptance rates in that a dasher can accept an order but later change their mind for whatever reason. While DoorDash says it will not deactivate an account for a low acceptance rate, it will deactivate accounts with completion rates of below 70 per cent.)

Some of the perks of becoming a top dasher might seem worth the trouble at first glance. September and October perks, for example, included the freedom to schedule a dash whenever a dasher pleased rather than having to schedule their time slots in advance. Another was that top dashers were prioritised to receive new orders first in the event that business is slow. What that means is that if two dashers in a given area are stuck waiting to receive an order, DoorDash will opt to send that order to the top dasher over a courier without the title.

But here’s the catch: Couriers who wish to become top dashers must maintain these achievements rather than merely meet them. As DoorDash notes on a support page for the beta program, “Dashers will only be added into the program on the 1st of each month; if you meet the criteria mid-month, maintain those stats until the last day so you can be eligible for rewards the following month.” To stay a distinguished dasher, delivery workers must continue to meet the high bar month over month.

Moreover, beginning in December, DoorDash is preparing to up the stakes. According to DoorDash’s own website and an email to a dasher obtained by Gizmodo, couriers will soon be required to maintain a 70 per cent acceptance rate in addition to the aforementioned demands.

This means delivery workers who have previously managed to meet the top dasher requirements while also cherry-picking more desirable orders may be faced with choosing between accepting lower-paying orders and keeping their top dasher distinction (which, again, allows them the ability to dash where and when they choose and get first dibs when business is slow).

Many factors can go into whether a dasher accepts a given order beyond the delivery payout. For one, the distance to and from the restaurant and the order’s final destination can also play a role in a dasher’s decision to accept an order. Accepting an order from a restaurant with long wait times, for example, may chew into time that a dasher might accept another delivery. In other words, dangling a top dasher carrot to take these less desirable orders allows DoorDash to manipulate dasher behaviour and drive them to accept orders that may not be worthwhile.

“In order to make money doing this, you have to weigh a ton of things when you get an offer. It’s not just how much money are they giving me for this order,” one dasher told Gizmodo. This person seemed sceptical that anyone would be able to continue cherry-picking orders under the new criteria. “The only people who are going to be getting top dasher are going to be the people who accept everything.”

But top dasher perks are nothing to scoff at, another dasher noted. This dasher said that while the new criteria aren’t necessarily worth the trouble in his smaller market, they may be for someone in a market where there’s greater competition for shifts.

“In some markets, the only way you can get a schedule is to be a top dasher,” he said. He added he thinks DoorDash is “trying to bully people into taking the $US2 ($3) orders.”

Doordash did not respond to our request to comment on whether the 70-per cent threshold for achieving “top dasher” status was an attempt to boost the number of orders dashers are accepting that fall in the low end of the minimum pay range.

When Xu announced the new pay model in August, he said the updated system would allow customers to tip after the fact. In an email the company sent to the dasher in the St. Louis market in September and reviewed by Gizmodo, Xu said this after-order tipping capability for customers will roll out “in the weeks to come.” As of early November, however, the change had yet to materialise, according to two dashers who spoke with Gizmodo. The dasher in the East Valley Phoenix market received an email about customer tips that said DoorDash users will have “up to 30 days to add tips for orders,” adding that dashers will receive push notifications to let them know when a retroactive tip has been added to an order. That dasher also said this week that to his knowledge, customers are not yet able to tip after an order is placed. DoorDash did not respond to requests for comment about retroactive customer tipping.

Given that dashers say they cannot be tipped after the fact, performing labour for brownie points with customers or the company seems like a steep price for little payout. If dashers perform their delivery exceptionally well and with special care—think including extra sauces or sides like chips, or a friendly and chipper attitude upon arrival—customers still, to date, cannot go back into the app an add a tip. So that $US2 ($3) order pays just that unless, again, the customer is carrying cash on hand.

But even in the event that customers are given the ability to retroactively add a tip, whether it’ll do much to assuage couriers hesitant to accept $US2 ($3) orders likely boils down to the individual dasher.

The St. Louis dasher says he is “cautiously optimistic” about the new system, but he added that he still has a problem with the base pay—especially considering the company was paying so little under the old model. Another dasher who spoke with Gizmodo also said he likes the new system, as do many others in both public and private support forums. But again, these dashers seem to have had success with the new model largely because they continue to cherry-pick for promising orders, meaning their acceptance rates remain low. Should DoorDash decide to tinker with its algorithm or user requirements, their ability to work the system in this way could be severely impeded.

Still, while consensus about DoorDash’s new system seems split between dashers still sussing it out, some of the company’s former workers who spoke to Gizmodo said the company left such a bad taste in their mouth—one former dasher called the new system a “joke”—they won’t be returning to the platform, despite assurances of higher pay and greater transparency about who is paying their wages.

“In the past year, DoorDash has become the biggest player in the delivery scene,” another former dasher said. “Let’s never forget that they got there through exploitation and dishonesty. I will never drive for them again, no matter how much transparency they claim.”