# How Uber's Surge Pricing Hurts Passengers and Drivers



## FrankUberBlack (May 10, 2015)

From: http://www.coachcalldc.com/how-ubers-surge-pricing-hurts-passengers-and-drivers/

If you haven't heard of it yet, Uber charges what they call "Surge" pricing. At times of higher than normal demand, they multiply the price, they claim, in order to get more drivers out on the road. Uber defends the practice, like in this case where a Durham man was charged $455 for a trip on Halloween, 8.6X the "base rate" as is described in the article. The North Carolina Attorney General's Office is looking into Uber's Halloween price surge.

The messaging is certainly unclear. Uber charges a "base rate" (Basically a "pickup charge") plus mileage and time, resulting in a "Normal Fare". Uber's "Base rate" ranges from about $2.00 to $15.00 depending on location and type of vehicle. Multiplying the "Base rate", even 8.6 times would result in a "surge price" of an additional $17-$125, not the $455 this passenger was charged. That's because Uber multiplies the ENTIRE FARE, including the extra time stuck in traffic which is already being charged for in the "normal" rate calculation!

For drivers, the "surge" is an elusive pot of gold at the end of a rainbow. Drivers are enticed to join Uber to earn "life-changing money", but who can make "life-changing money" driving a car in a metropolitan area stuck in traffic at $1.05 a mile? Really? Its only with the lure of the illusive "surge" that makes driving for Uber worthwhile. This situation creates a lot of unintended consequences. Uber drivers continually go offline and online to attempt manipulate the multiplying surge, keeping another phone open to Uber's client app so they can maximize their earnings, cancelling trips on trips they are already en route to if the surge goes up. A number of apps such as Quxsi, Surgeprotector, and Farecast are being developed to assist passengers in avoiding the surge, but the same apps, such as Farecast, along with the Uber customer app, can help drivers maximize their earnings driving for Uber, at the expense of customers.

Dynamic pricing, the concept behind Uber's "surge" is an economist's dream of perfection, the notion that supply and demand can be brought into equilibrium by changes in the price. As demand increases, and supply remains constrained, prices are increased so that more supply is brought into the market, or so the theory goes. We see examples of dynamic pricing around us continually, from the seasonal and last minute price of hotel rooms and airline tickets, to the High Occupancy Vehicle toll-lanes going up all over metropolitan areas.

But Uber's surge model has serious flaws, first of which is that it really ANGERS its customers, just when they need the service the most. Uber doesn't "lower" their prices when demand is low, it only raises them, sometimes exponentially, when demand is high. Many of Uber's drivers are manipulating the system, only going online when surge conditions exist, or cancelling trips they've already accepted (to keep their acceptance rate high) and even kicking customer's out of their cars during a trip in order to capitalize on the surge on the next trip!

Uber and its investors actually benefit from this activity. When a lower fare trip is cancelled or non-accepted, the same trip can be multiplied with the surged pricing at the expense of its customers. If Uber's pricing strategy was to attract more drivers to the roads, why doesn't it give the ENTIRE SURGE AMOUNT TO THE DRIVER. No, it keeps a hefty percentage (20-30%) of the surge multiple for itself. Uber tells customers that if they don't like the surge price they are being offered, they can "wait out the surge" or get a text message when surge ends. Maybe to get more drivers on the road, they should just raise their prices a bit and allow the drivers to make a decent living without the hyperbole of promise of the surge! Of course, having a supply of drivers out on the street costs Uber NOTHING, because the drivers are "independent contractors" spending their own money, time, and gas and in their own cars to be out on the road just to run Uber's app and maybe make a little money.

But rather than complain about Uber's surge pricing, the best approach would be for consumers to become educated, refuse to participate in Uber's pricing shenanigans, and seek out viable alternatives themselves, just like you would if you were looking at a $1,000/night hotel room, a $30 hot dog, or a $25 bottle of beer. It's educated consumers that make a viable, competitive, healthy, and fair market.

CoachCall provides professional drivers in properly licensed and commercially-insured Black Cars and SUVs either "on demand" or "in advance". We price our trips fairly, by calculating a simple base rate and a price per mile. No surprises, no surge, no anger.


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## why uber why (Jan 9, 2015)

No drivers are kicking riders out midride to take a surge ride . Sounds ridiculous. show some proof besides some random twitter quote . Everything else i can agree with and also believe they should just raise the rates and stop doing the carrot on a string trick with the surge .


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## Lando74 (Nov 23, 2014)

You couldn't put even a little effort to make your app/website not look like an Uber clone?


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## MKEUber (Aug 20, 2014)

Before the rate and surge cuts, surges would get me to drive the times I would normally avoid. For example, the bar time crowd. I mean, why would I drive a bunch of drunks around at 2 in the morning if it wasn't for the fact that I was making a lot of money? However, Uber cut rates and they also cut the areas and the multiple the surges will hit. Guess what? As a result, I do not drive that crowd anymore. The price simply isn't worth it for me anymore. 

The point of my post? If surges were totally eliminated, you won't get drivers to drive during undesirable situations (bar time, snowstorms, crowded events, etc.)


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## itsablackmarket (May 12, 2015)

I disagree with the article and my initial impression is that company has a stupid name and is stupid in general. Two things anger a customer: Not being able to get a car, and surge pricing. I believe both of those could have been avoided if there were reasonable rates. Drivers shouldn't be chasing surges, they should be chasing demand. There is no incentive to do that when most places with high demand are not worth the trouble at the normal rates. If a driver goes out and makes WORTHWHILE MONEY on every trip they do, then they will be out much more frequently, adding to the pool of available drivers, and since there is demand all over all the time, there would be drivers everywhere and Uber would be making much more than they're making now and actually be doing something great in this world rather than being a greedy piece of shit company. I firmly believe there is enough business to go around, and everyone in this equation can make money, and everyone whether using Uber or driving, can have a pleasant experience. Every time a surge rips off a customer, and yes surge has 90% to do with ripping off customers and 10% to do with filling demand, that customer feels betrayed and may never use Uber again and will tell others not to use it. That directly contributes to Ubers reputation dropping, drivers doing less rides, and stopping driving altogether. All these things build on top of each other to make Uber an unpleasant experience for everyone involved as now you have customers and drivers leaving the system, and the only ones staying are those wish they had a better option. Then there are those who are too stupid to understand what's going on or are simply new to Uber and still naive to their evils of opportunities to be a much better company having been blatantly thrown away unnecessarily, so they become critical of those who are critical, in a very ignorant way. Suddenly you have two sides that don't agree with each other. One is a stupid bully (Uber) and its blind supporters, and the other is the real victim, just normal people who are intelligent enough to see blatantly stupid mistakes made by a greedy company that doesn't seem to care. Case in point, the Uber subreddits on Reddit.com ban people who are critical of Uber because they are so blind, they think anyone who is critical of Uber is an angry cab driver trolling them.


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## gietno (Jul 17, 2015)

Totally agree withwhat MKEUber has said


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## LA#1x3 (Jul 9, 2015)

Is this **** on a uber forum talking shit and trying to advertise his own bullshit company. Like ur company is the best and dosnt try to make money. U guys are all just the same greedy asses.


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## mizzrock (Jan 3, 2015)

Martin818 said:


> Is this **** on a uber forum talking shit and trying to advertise his own bullshit company. Like ur company is the best and dosnt try to make money. U guys are all just the same greedy asses.


It's all capitalism.


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## Lack9133 (Mar 26, 2015)

MKEUber said:


> Before the rate and surge cuts, surges would get me to drive the times I would normally avoid. For example, the bar time crowd. I mean, why would I drive a bunch of drunks around at 2 in the morning if it wasn't for the fact that I was making a lot of money? However, Uber cut rates and they also cut the areas and the multiple the surges will hit. Guess what? As a result, I do not drive that crowd anymore. The price simply isn't worth it for me anymore.
> 
> The point of my post? If surges were totally eliminated, you won't get drivers to drive during undesirable situations (bar time, snowstorms, crowded events, etc.)


I think that is only true when you have unlimited vehicles on the road as you see with Uber. No driver is going to sit around with an empty vehicle at 2:00A not making money. If you look at the taxi industry, those drivers have traditionally came out to deal with the drunks even without the surge. The reason being is that if you artificially cap the number of vehicles on the road, during peak times, demand is greater than supply which means drivers get more trips at a slightly higher rate. Yes, it means higher wait times for the customer but it also brings plenty of drivers onto the road who understands their back seat will be full all night.


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## MKEUber (Aug 20, 2014)

Lack9133 said:


> I think that is only true when you have unlimited vehicles on the road as you see with Uber. No driver is going to sit around with an empty vehicle at 2:00A not making money. If you look at the taxi industry, those drivers have traditionally came out to deal with the drunks even without the surge. The reason being is that if you artificially cap the number of vehicles on the road, during peak times, demand is greater than supply which means drivers get more trips at a slightly higher rate. Yes, it means higher wait times for the customer but it also brings plenty of drivers onto the road who understands their back seat will be full all night.


True, if there are enough idiots out there to stay up late to drive drunken idiots around at base rates, there is no reason for Uber to surge the rates. But even though there is constant business at that hour, it is still not worth it to me. Do I want to drive drunks around at bar closing time between the busy times of 1:30 - 3am for about $75 total at base rate? No, that is not worth it to me. What about $150 - $200 for 1.5 hours work? Then it starts to become worth it, and I make the effort to stay up late to do it. It used to be like that last fall, and I was there almost every Saturday night. This Spring and Summer, I just don't do it anymore after the cuts.


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