# How Uber surge pricing really works



## zMann (Feb 21, 2015)

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/04/17/how-uber-surge-pricing-really-works/


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## Sweet Ping (Jan 20, 2015)

Surge during high demand a is on because people need rides, not because of lack of cars.

If there was no surges at all, drivers would stay home at slow times and work when it's busy, meeting demand, which is predictable: commute hours and weekend nights.

The price just needs to be right, not "flexible"

It's all about uber's greed, paying drivers pennies and bribing them with stupid surges


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## Michael - Cleveland (Jan 1, 2015)

LAndreas said:


> I thought surge prices are set by Uber pax manually bidding the price higher (you have to type in the multiplier you're willing to accept). So it shouldn't be surprising to see surges ramp up in smaller increments (that's rational bidding behavior, trying not to overpay by raising the price too much with the next bid). On the other hand, once the active bidders that REALLY wanted / needed that car have gotten their car, the surge will collapse, and - as should be expected - in big steps, because there are usually no other riders who needed a car that badly and hence are happy to wait it out a little bit, coming in much lower, if at surge pricing at all.
> The author of this article seems to assume that Uber initiates and sets the surges. The way I see the pax app generate dynamic pricing, it's the aggregate of potential pax who do the bidding.


In what market anywhere in the world do passengers 'bid' for a car by typing in a multiplier they are willing to pay? (And since a ride request ('ping') only goes to the closest driver, one at a time until someone accepts the request, just how would this bidding work?)


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## Michael - Cleveland (Jan 1, 2015)

LAndreas said:


> You have to confirm the surge factor???


A rider confirming that they accept the pricing in effect at a given time has NOTHING to do with 'bidding'.
The confirmations is a function to make sure the pax knows what the fare-rate is for that trip-
and accept it (so that they can't later ask for a fare reduction).



> How does the Uber pax app in your market work?


The same way it works in every market I know of:
*During times when the demand for cars is higher than the cars available, the price surges by a multiplier determined by an Uber calculation (not by pax bidding) to encourage more cars to drive to the area where the demand is high.*



> If you don't have a car respond, you can bid up the price?


I have absolutely no idea what that sentence/question means.
But, no - as a pax, you cannot "bid up the price".


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## zMann (Feb 21, 2015)

As far I know that surge price is based on demand and supply but I would not be surprised if Uber implements any other factors to increase or lower the surge price.


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## Michael - Cleveland (Jan 1, 2015)

LAndreas said:


> Actionjaxx had Uber mmgt confirm that they don't create surges when there is no demand, all they set are the ranges.
> 
> Note how the pax app offers you a surge multiple when you can't get a car. If you accept, you just placed your bid (I had read here that Uber in some markets even implemented a feature in the app where you have to type in the multiple to confirm (essentially as a digital signature), but I just checked here in the Socal pax app, and that's not implemented, so I don't know if that's true anywhere). Doesn't matter, by accepting the offered range, you placed your bid. Bid increments will be small on the way up, because Uber will more likely get someone to bite if the multiple increases slowly).


Accepting a QUOTE is not the same as placing a BID - at least it's no different than any other ride request. Following your logic, placing ANY ride request is placing a 'bid' which a driver can accept or reject.

When stop to buy gas, the price you pay may be higher or lower than the last time you filled up your tank. You can either accept the new price and make the purchase, or you can decide not to buy. Same thing with a ride request. The price can be different each time you request a ride. You do not get to 'bid' on the price to see if someone will accept a lower fare.


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## Michael - Cleveland (Jan 1, 2015)

LAndreas said:


> Are we debating semantics?


Well, from your perspective it's semantics, as we are, of course talking about pricing in a free market and supply side economics. But from my perspective, no - it's not semantics, as bidding and free market pricing are not identical.


> I'm not sure how we could disagree..


Well, it could be over your very, um, 'non-traditional' (kind way of saying 'wrong' - hehe) definition of the word 'bid'!
But we can agree to disagree... yours is certainly an interesting perspective!


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