# My theory: Uber uses Surge to suppress demand



## yojimboguy (Mar 2, 2016)

It's the only thing that makes sense to me. Uber isn' trying to reward the few drivers that are out there, they're trying to shut down demand until there are more drivers. They have to know that requests go down to almost none because people will wait out the surge.


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## Shangsta (Aug 15, 2016)

yojimboguy said:


> It's the only thing that makes sense to me. Uber isn' trying to reward the few drivers that are out there, they're trying to shut down demand until there are more drivers. They have to know that requests go down to almost none because people will wait out the surge.


That doesn't make much sense at all. Uber takes their cut after surge so surge brings them more money too.

There are times Pax can wait out surge. However when the weather is bad, when there are events Pax can't always wait the surge out.

As a driver there is some skill to knowing when Pax bite on high surges. Hint: pick up business Pax they don't care about surge because their job will reimburse them for it.


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## yojimboguy (Mar 2, 2016)

Neither of us will know whether aggregate revenue during a surge goes up or down until Uber's books are publicly opened. Maybe one of the zillion lawsuits will do it.

But my guess is it goes down, because only the drunk, the desperate, or the clueless noobs order one. Not enough to make up for the regular users who wait it out..

Uber's rationale for acting in accord with my theory is to provide a better explanation and an excuse to their pax. Instead of "We can't maintain a sufficient number of drivers to meet demand", they say, "We are overwhelmed by this sudden temporary demand, but you can save money by waiting it out, and there's a nice function in the app to let you know when prices are back to normal."

So not having enough drivers is seen as a money saving benefit instead of a failure.

And the few of us who occasionally catch surge rides are benefiting from the drunk, the desperate, and the clueless noobs.


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## brendon292 (Aug 2, 2016)

Shangsta said:


> Pax can't always wait the surge out.


You underestimate how f*cking cheap most PAX are.


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## Shangsta (Aug 15, 2016)

brendon292 said:


> You underestimate how f*cking cheap most PAX are.


Some do but like I said in my initial post , pick up at places where you are likely to get a business pax who isn't paying for the Uber. I have had people pay 80 dollar fares because amazon or Microsoft is paying for it.


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## brendon292 (Aug 2, 2016)

Shangsta said:


> Some do but like I said in my initial post , pick up at places where you are likely to get a business pax who isn't paying for the Uber. I have had people pay 80 dollar fares because amazon or Microsoft is paying for it.


Unfortunately I don't live in a market with many business people. It's a town of students and cheap ass government workers (the ironic part is government workers make amazing salaries, they're just to frugal to spend any of it).


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## Shangsta (Aug 15, 2016)

brendon292 said:


> Unfortunately I don't live in a market with many business people. It's a town of students and cheap ass government workers (the ironic part is government workers make amazing salaries, they're just to frugal to spend any of it).


I wouldn't be surprised if these government workers are getting their Uber reimbursed. It is now the number one reimbursed expense in America. Open your Pax app. Strategically place yourself, set your filter for priority and take in the surge bux


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## Ms Stein Fanboy (Feb 11, 2017)

yojimboguy said:


> It's the only thing that makes sense to me. Uber isn' trying to reward the few drivers that are out there, they're trying to shut down demand until there are more drivers. They have to know that requests go down to almost none because people will wait out the surge.


That's not _your_ _theory_. That's what they stated as the reason when they introduced the feature years ago. If there are too many pax versus available drivers, the rate goes up to reduce demand while in the mean time drawing more supply toward the surging area. They have never claimed it was as a favor to drivers. It isn't like they ever said: "every once in a while we'll let drivers make more money from trips to be nice to drivers".


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## Ms Stein Fanboy (Feb 11, 2017)

Shangsta said:


> That doesn't make much sense at all. Uber takes their cut after surge so surge brings them more money too.
> 
> There are times Pax can wait out surge. However when the weather is bad, when there are events Pax can't always wait the surge out.
> 
> As a driver there is some skill to knowing when Pax bite on high surges. Hint: pick up business Pax they don't care about surge because their job will reimburse them for it.


NO, it makes perfect sense. Uber has already explained the "theory" behind surge. Raise the price, reduce demand. The strategy is to try to get as much money from each driver. If there aren't enough drivers to go around, then raise the price. Some pax will drop out, and ideally there will only be enough pax left willing to pay the higher price, to exactly match the number of available drivers. Also draw more drivers to the area to supply rides to the pax as the price goes back down.


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## Tese (Jan 16, 2017)

Shangsta said:


> Strategically place yourself, set your filter for priority and take in the surge bux


Would you explain "filter for priority," please?


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## Shangsta (Aug 15, 2016)

Tese said:


> Would you explain "filter for priority," please?


Destination filter will get you priority for rides


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## NCRBILL (Feb 13, 2016)

Shangsta said:


> Destination filter will get you priority for rides


I would like you to prove this statement!!!


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## Shangsta (Aug 15, 2016)

NCRBILL said:


> I would like you to prove this statement!!!


Whats the mystery? That's how the filter works, it takes priority over closest driver within a certain radius.

I use it during surges all the time to get 60 dollar rides.

You just have to know when and where to use it.


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## NCRBILL (Feb 13, 2016)

I still don't see how that puts you ahead of others. It just gets you in the direction you want to go. 

Still need you to provide how you feel it trumps others who are closer.


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## Shangsta (Aug 15, 2016)

NCRBILL said:


> I still don't see how that puts you ahead of others. It just gets you in the direction you want to go.
> 
> Still need you to provide how you feel it trumps others who are closer.


I have tested it with other drivers. I am not going to give all my secrets away but good luck!


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## Hungover Undergrad (Sep 27, 2016)

Of course surge is to lower demand, that's the whole point. If there aren't enough drivers for the riders looking for a ride, it surges so that demand drops to match the limited supply.

The riders willing to pay the premium order rides anyway. The surge attracts drivers so that supply of drivers will meet demand of riders. When there is enough supply of drivers, the surge goes away. That's why you don't waste gas to chase surges, it's what surges are designed to make you do.


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## uberlakeland (Aug 24, 2016)

Shangsta said:


> Destination filter will get you priority for rides


LMAO. Wait for for what one hour or 30 min??


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## Wiz65 (Feb 29, 2016)

Econ 101.......
Surge is supply and demand in its purest form. The demand does not "shift", we simply move along the established demand curve.

http://www.investopedia.com/university/economics/economics3.asp


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## sarasota (Jan 2, 2017)

I notice that as soon as I arrive in surge area, the surge pricing ends. It is obviously just way to get drivers to spread out across area. I don't bother driving to search area any more unless it happens to be my destination


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