Uber’s move to (not really) kill surge pricing


Uber is slowly moving to kill the “surge pricing” pop up in a move that will likely win on the customer psychology scale, but which also does nothing to actually kill surge pricing in the company’s ride pricing algorithms. In a blog post yesterday Uber explained the rationale for the decision and how it got there:

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.

We moved to upfront, per trip fares—just like airlines and hotels—two years ago when we launched uberPOOL. Riders needed to enter their destinations so we could match them with other people headed the same way. This allowed us to calculate the actual fare in advance and show it to riders before they booked their ride.

Knowing how much a ride will cost in advance is clearly something riders appreciate: today uberPOOL accounts for over 20 percent of all rides globally. And we now want more riders globally to benefit from this feature.

So, up-front pricing is the driving factor, not the generally cheaper rates and high likelihood of having a private ride anyways. Sure thing, y’all.

The new “up front” rates are rolling out across US markets and India as well. The company says that the calculations are based on estimated travel time, traffic, distance and demand. And it is that last bit – the impact of demand – which means surge pricing really isn’t dead. Instead,

[W]hen fares go up due to increased demand, instead of surge lightning bolts and pop-up screens, riders are given the actual fare before they request their ride.

So it is still surge pricing. And it is still going to be at the whim of the company. But it is also now a fixed rate rather than a metered ride. I am spectacularly skeptical that the fixed rate rides will be cheaper than metered ones, but I suppose only time will tell. Either way, the surge lives on. We just won’t call it that any more.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.

2 Comments

  1. And does nothing to stop what is likely behind this ‘surge’ pricing many times-the drivers banding together & going off-line to generate the ‘surge’.

    1. My experiences with surge pricing are almost universally tied to specific times of day in certain markets, not dynamic demand. I suppose in a small enough market a group of drivers could manipulate the system like that but it seems less likely to be successful in larger cities.

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