Fortunately, Uber Didn't Kill Surge Pricing... It Simply Took the Math Out of it!

Rich OrdBusiness

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Uber announced today that they are in the process of rolling out a change to their surge pricing concept, going to a fixed upfront price instead. It doesn't actually change the price to the rider, but it doesn't require a mathematical calculation either. It's clearly targeting people who hate surge pricing. Uber even mocked its own surge pricing policy in a blog post, "Imagine buying an airline ticket without knowing the full fare until the end of your trip. Or booking a hotel room online and being told that the real price would be 1.3X. Yes, that sounds odd—but it’s what happens with many Uber trips today."

Uber has been using upfront pricing with its uberPOOL service since it launched two years and has had good reactions from riders. uberPool now accounts for over 20 percent of all rides globally, according to Uber.

The company is clearly trying to release pressure that's been building against surge pricing with some customers and with certain governments. Since the price is still surging, Uber apparently hopes that by taking the math work out of the equation people won't hate it as much.

Personally, I love surge pricing because it allows me to get an Uber when otherwise none would be available. For instance, on New Years Eve at 1 am no cabs are available in many cities, surge pricing from Uber and Lyft means I won't have to sleep on the curb. Why people are against this is evidence of how horrible schools have become in teaching economics. People have this nonsensical idea that Uber is trying to cash in with surge pricing when in actuality it's the only way to encourage more drivers to voluntarily start taking rides at times when there is high demand. I would rather pay more and get a ride than have a fixed price and have no Uber cars available.

One of the changes to how riders use Uber is the need to input a destination. It's optional now but will be required in order to calculate a fixed fare. Another variable that Uber must have considered is traffic, since the time it takes to get to a destination is crucial to pricing.

Here are some reactions to this change and surge pricing in general:

Thought this was funny, but this guy clearly doesn't agree with me, he thinks Uber and Lyft are thieves. I wonder what he will think if surge pricing is eliminated and he can't get a ride after leaving a club at 3 in the morning?

Exactly, surge pricing allows rides to be available even during high demand. In parts of India surge pricing was suspended in an agreement with Uber and government. Dumb.

How many times do I have to say it? Uber isn't using surge pricing to increase its revenue, it's doing it to entice more drivers to take rides when there are more ride requests than there are drivers! No surge pricing means no rides during busy times, which is anti-consumer, not pro-consumer. Sheesh!

Rich Ord