You may have noticed Doordash Testing the New Pay Model at scale now, especially if you are active in any driver forums.
There is panic. You see all the “see? I told you so” folks who didn't want the model changed. Dashers are in an uproar.
It's a test, people. It's only a test. Give it time, don't jump to conclusions.
Understand How Testing Works
Here's the thing you must understand: Testing does not mean this is what the final product is going to look like.
You have to understand how testing works on things like this. It's something that you especially see in marketing. Marketers will put out several different messages that are all similar. They tweak words, they tweak images, they tweak headlines. They measure the results. And then They tweak some more until they find the right combination.
That's what Doordash is doing right now. This is the first time they are actually testing the new pay model at scale, to the point where enough people notice it. They're going to tweak, they're going to try different things.
Their Objective: Why is Doordash Testing the New Pay Model?
I keep harping on this message, but it's important. Doordash has to get their deliveries completed. If the restaurants accept the delivery orders, prepare the food, and the food sits there and isn't picked up, the restaurants waste a lot of money because they don't get paid for this. If restaurants lose too much money, they quit using Doordash. And then, If customers don't get their orders? THEY quit using Doordash.
How do you think Doordash passed Grubhub in the first place? Grubhub is already experiencing this problem.
If Doordash pays too little, drivers won't accept the deliveries. And if that happens too much, Doordash loses their edge over Grubhub. They fall back with the pack.
They cannot let that happen.
So the question is, how low is too low?
THAT is what Doordash is Testing the New Pay Model to find out right now.
Desirability and the New Pay Model
Let's take a look at the pay models:
The current pay model is base ($1) plus tips plus promotions plus “Doordash additional pay.” The Doordash additional pay is added if base plus tips adds up to less than the additional pay.
The new model will be base plus tips plus promotions. The difference is the additional pay is going away.
But, is it?
Look at what they said would calculate a base pay based on the “estimated duration, distance, and desirability of the order.” (the words were theirs, emphasis mine) What that means is, if they find the order is not desirable as it stands (once the tip is figured in) they will add to the base to make it desirable enough.
How much is enough?
THAT is what Doordash is testing the new pay model to find out right now.
Doordash will adjust the desirability part of the base pay enough to get orders accepted.
But they're only going to adjust it JUST enough.
We know that Doordash tends to adjust the guaranteed pay on a delivery right now if it's not being accepted. If too many dashers pass on an order, they increase the value until someone accepts. But here's the problem: It takes time to offer an order, have it rejected, offer it again, have it rejected again, and so on. If it has to be offered too many times, the order is now in danger of being late.
So they can't start with too low an offer. They need to figure out where to start out.
This is what they are testing right now.
Think of it this way: Have you ever gone to a garage sale, found something you like, made an offer, and they accepted it right away? Did you think to yourself, maybe I could have offered less?
That's what Doordash is testing right now.
Say the customer doesn't tip. They know the order isn't desirable. So they use that desirability feature of the base pay and make the base pay $6. Would they have taken it for $5? Would someone have taken it for $4? How many Dashers would do it for $2?
Developing a base line.
I'm pretty sure Doordash knows that most drivers aren't going to accept a $2 delivery offer. But a few will. Is there a high enough percentage that they can get away with offering $2 deliveries right off the bat? THAT is the part of the pay model Doordash is testing right now. If enough people accept the $2 offers, they can start there. Otherwise, they move up, test some more, adjust again, test some more, etc., etc.
Because they are offering $2 offers right now, do not assume that will be the norm. The bottom line is, they have to get those orders delivered. They are smart enough to not pay too low and leave it that way. But right now they need to understand patterns, they need to know where to go with this.
Four Takeaways from Doordash Testing their Pay Model
Using Dashers as Guinea Pigs and Statistics tells us a lot about how they view their Dashers.
I had a comment on another article from Steve in Dallas. He was one of the lucky ones to be tested. His wife also dashes in the same market and she's still on the old model.
Steve said he made about a fourth of what he would normally earn.
I understand how the testing works and why they do the testing, but watching this testing also says a lot about the ethics of the company. I'm sorry, but people aren't dashing because they love just driving food around. They're doing it to earn a living, or to supplement their income. To suggest that $2 for a delivery is anywhere near acceptable for total payment for a delivery when it costs more to do that is unacceptable. Doordash is playing with the livelihood of the people who are ‘lucky' enough to test the new model, especially when they test the low end of the model.
Doordash wasn't ready to make this change.
Doordash announced a new model would happen in July. After that it was pretty much crickets. In late August, they sent out details of the new pay model (without much detail). They said it would happen next month. It's next month, and they're just now starting to actually test the actual model in a way that's noticeable. It's apparent now that the actual change will happen later this month.
I'm pretty sure this was a very sudden decision. I don't think that this was about them dragging their feet as much as it is them needing time to figure out just what this pay model needs to involve.
The timing of this is bad for Doordash.
Doordash cannot afford a PR nightmare right now for two reasons: AB5 and IPO. With pressure mounting in California to force them to use employees, bad press about how they treat their Dashers would be disastrous. After Uber's disastrous IPO and post-IPO performance, investors will be nervous about buying stock in Doordash. This is not a good time to piss off so many drivers that Doordash cannot fulfill their orders and loses market share.
I think this means that Doordash is not going to let the final product be anywhere near as bad as it looks. Obviously, that assumes that the powers that be are smart enough to understand the ramifications if they don't. I'm losing confidence in that.
It is more important than ever to set your price by accepting and rejecting orders.
I talk about this in more detail here. Doordash is testing their pay model and playing a game of ‘how low can you go?' If you accept those $2 offers, that's telling them they can go that low. Hold your ground.
If holding your ground means not getting enough orders, you absolutely need to have other options. You need these options open anyway in the event that Doordash really does botch this new pay model that they're testing.
Hold your ground. Let them know your price. If they aren't willing to meet your price, find someone that will.