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Ola standardizes commission to add more drivers

Written by Avanish Tiwary Published on   2 mins read

The SoftBank-backed company earlier gave out a fixed payment as well as incentive.

Bengaluru-based cab-hailing unicorn Ola, in its bid to add more driver-partners on its platform, is moving to a standard payment model instead of the earlier incentive-based commission model.

Local media Economic Times citing sources said it’s been two months since Ola has been working on a nationwide standard commission of 25% for its driver-partners. “With this move, drivers are clearly able to ascertain earning and differentiate it from variable incentives,” a person directly aware of the matter told ET.

After 2015-16—the period when cab-hailing companies Uber and Ola, in the bid to outdo each other paid their driver-partners the highest incentive ever, reaching as high as INR 500 (USD 7) for each ride—has now come down drastically.

Earlier, the SoftBank-backed company provided a fixed payment as well as incentive, which was based on extra rides that driver-partners would do after finishing their quota of daily rides. Currently, the incentive for drivers has come down to just up to 5% of the earnings.

Ola has been preparing for its IPO and is trying to cut down on losses. It reported a rise of 16% in its revenue for 2018-19 that reached INR 2,155 crore (USD 324 million), while it narrowed its losses by more than half to INR 1,158 crore (USD 174 million) compared to the previous year.

The report also said that the company is looking at leasing its vehicles to corporates and its self-driving business, including lending two-wheelers to vehicle renting company Vogo—with which it entered into a strategic partnership with USD 100 million funding in Vogo in 2019.

Ola has in the past tried leasing out vehicles to its driver-partners which didn’t go well as drivers defaulted on their loan due to a steep fall in their incentive. The ET report pegs Ola’s vehicles at 10,000 which makes it Asia’s largest lease company.


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