Here’s How Uber Is Going To Make You Forget About Surge Pricing

Uber’s surge pricing tends to be pretty controversial. It seems to get a ton of media attention around New Year’s Eve, after we hear about all of the insane surge pricing from the night before.

Personally I don’t have an issue with surge pricing as such. Do I like paying it? Of course not. But I think it’s ridiculous when people agree to surge pricing, get a ride, and then after the fact complain the fare was too expensive. Uber is very transparent about it, and even has a functionality where they’ll notify you when surge pricing isn’t in effect anymore.

Uber-Surge-Pricing

My one complaint about surge pricing is that it seems to be erratic, as it changes by the minute. I wish it took a bit more of a macro look at the market. I also feel like there should be some cap on how much the surge is — at some the price simply doesn’t reflect the product provided. Even so, I still don’t have sympathy for people who agree to a fare and then complain after the fact.

Interestingly Uber has devised a plan to make you look at surge pricing differently… or ideally forget about it altogether. They’re very much taking this technique out of the Delta SkyMiles playbook. Delta SkyMiles doesn’t publish award charts anymore. They’re taking a “what you see is what you get approach,” and claiming that people just want to directly be told how much a ticket will cost, rather than having to refer to some chart.

Uber will be doing the same thing.

Per the Uber Newsroom (I’m sharing the entire post, since I think the airline comparison is interesting):

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 in April we began slowly introducing upfront fares for regular uberX trips in cities across the US and more recently in India, with more to follow. To date, hundreds of thousands of riders have experienced upfront fares as part of this rollout.

Upfront fares are calculated using the expected time and distance of the trip and local traffic, as well as how many riders and nearby drivers are using Uber at that moment. And when 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. There’s no complicated math and no surprises: passengers can just sit back and enjoy the ride.

In other words, rather than having the popup about surge pricing, they’ll instead quote you an all-in price, with no indication of whether there’s surge pricing or not.

From their perspective it’s sort of brilliant, when you think of consumer behavior. If there’s a surge of any sort (even if it’s 1.2x, or something), people immediately think “oh, I’m overpaying.” Since many people aren’t familiar with Uber rates between two points, they won’t necessarily have reference as to whether they’re overpaying or not.

While this is a customer unfriendly move and I don’t like the lack of transparency, I’ve gotta give Uber credit for playing this well, and how they’re marketing it. Who wouldn’t want an “upfront fare?”

Apparently this will be rolled out globally in the coming months.

What do you  make of Uber’s “upfront fares?”

(Tip of the hat to View from the Wing)

Comments

  1. Being in NYC and owning a car, I dont use Uber much. However, when I do, I think I’d feel better agreeing to a price beforehand instead of knowing that im being charged more than normal during surge.

  2. Screw uber. I walk/take public transit whenever possible nowadays. Next choice is Lyft, then uber, finally taxi. Perhaps I should re-arrange those last two…

  3. I don’t have the numbers behind this, but based on what I’m charged for UberX, drivers aren’t paying enough. They need to charge more for the service. I’ll happily pay more (within reason) for a service that I value so highly. I love the idea of upfront quotes. They were already doing it in Philadelphia two weeks ago when I was there for work.

    I really wish they would pay the drivers more fairly and take a hard line against no tipping again.

  4. I LOVE fixed rates, and it removes the incentive to milk the meter, so I’m all for this. The driver also can’t “forget” to turn the meter off for a few blocks after they drop you off, which is nice.

    Downside is that you always have to know the address of your location now, unless you use the map and put a pin in the location I guess, which also means you have to know where things are located. In a new city, when you are going to a big landmark, it’s nice to be able to just saw “take me to the White House” without having to know where it is. Minor downside though.

  5. @RCB – the destination field is searchable. You can put “White House” into the destination field and it will search for and generate an address for the White House. Or at least I assume this is so (haven’t tried White House per se) because it works for things like “Airport.”

  6. Similar to the destination thing I wonder how they would add stops along the way. In the past I’ve asked drivers if they would mind going slightly out of the way for an errand or to pick up a friend along the way. As far as I know Uber doesn’t provide an option multi destination rides. I suppose you could keep starting new rides.

  7. so seeing a basic multiplier (e.g., 2.0x) for surge pricing is “complicated math”? what a time to be alive.

  8. A question similar to Gaurav’s: does that mean that I’m bound to what I write in the destination field?

  9. Not a fan of this. First, if you look at Uber’s fare estimates (where they give you a low end and a high end of what they think a fare will cost), my rides almost always end up being lower than the low end of their estimate. This seems to suggest that they overestimate how much a ride will cost.

    Also, I wonder if this gives Uber drivers an incentive to drive like maniacs. If I’m getting paid $x to drive someone somewhere, I’d want to hurry up and get them there so I can pick up my next fare.

    I’m fine with fixed rates for UberPOOL, just wish they’d leave UberX alone.

  10. I don’t like it because it will reduce the efficacy of surge pricing since people won’t be encouraged to move outside the surge area or wait out the surge in the way they would have been before. Will drivers be able to see surge levels? If not then it seems like it won’t work to bring more drivers to an area.

  11. @Pavel….exactly!!

    Ben, dressing this up as a good thing only works for idiots! The deterioration of society and humans continues… This civilization is coming to an end!!

    I WILL notice when a Weho to LAX trip jumps from $14 to $25 – $36!!

    Uber is the new devil on the block!

  12. This is not so good for tourists in new cities. When I’m travelling, I don’t know what a good deal is for A to B. I just automatically assume Uber is cheaper than a taxi, so I book an Uber. If there’s surge pricing, I’ll try to find a taxi instead. Now, I don’t know whether an Uber is cheaper than a taxi.

  13. It stinks for the consume–me–and for the driver. Flat rate that is actually inflated–surged–sounds great but unfair to the driver, esp in places like nyc and sf where traffic can be unpredictable and insane. And why isn’t an upfront alert that prices are higher–surging–good enough? It’s worked for me all over the country and gives me a choice: do I pay more, take a cab, walk, wait for demand to decrease. I value those choices way more than another “transparency scam”. Will take a look at Lyft even tho I have loved UBER.

  14. I’ve had this enabled in the app for months, and it just tells you the max amount; fears of it secretly overcharging you are unfounded

  15. To Garrett

    I strongly suspect that you are a Uber Driver and that your post is “slightly biased”.

    I cannot imagine passengers who think that the drivers are underpaid and who want to be “allowed” to tip the driver. Especially when we are discussing surge pricing which is a blatant scam.

  16. @Bert: No idea if Garrett is an Uber driver or not, but believe that there are people that worry about whether drivers are overpaid and would like a way to tip, as long as its in the app. This is more true (at least for me) when it’s a short trip that is either walkable but I don’t have the time to walk or is just on the edge of walkable. If the Uber fair is $6, I’d like to be able to bump it up to $7. This is something I did when I used taxis more often as well. Short rides just don’t take into account opportunity cost very well.

    But it needs to be in the app as I just don’t carry cash. On the other hand, if it gets out of hand where people are getting down-rated for not tipping (or even not tipping enough!), then it destroys the value of the service so I worry about that as well.

  17. I’m pretty new to using Uber and Lyft but I just did in Vegas since most taxi drivers I’ve ever had there actively try to rip me off and get mad when I tell them what streets to take since I know the back ways to get around a lot faster (thus cheaper) than the strip. So although my experience is limited I will add my two cents here. I had a bunch of promotions for both that were expiring. Uber – I had 50% off my next 3 rides up to $10 max discount. Lyft I had a flat $5 off my next 10 rides. So before I took a ride I used the estimate for each company and then picked accordingly. I found in Vegas there are a lot more Uber drivers so I did have to wait a few minutes longer when I went with Lyft. Every Lyft discount was applied seamlessly. All three of my Uber rides were not discounted automatically and I had to contact them each time. The first was the best because they incorrectly told me I didn’t add the promotion to my account. I had so then suddenly it was a ‘technical issue’. All three times. Plus if I do want to tip I have to have cash on hand with Uber and don’t have to deal with that with Lyft.

    Bottom line for me on my limited experience is that Uber left a bad taste in my mouth. I’d hate surge pricing notification going away. It is not hard to get an estimate, under a minute. I want to know if I’m adding to the congestion or if I wait a bit longer if I’m not expected somewhere I can save some money.

  18. According to MacWorld at least, uber upfront fares will still say “fares are higher due to increased demand” during surge times. So I’m fine with the new system

  19. Well let’s put it this way I drove 1:55 minutes away had to pay 20.60 in tolls I ended up with 106$ after uber services. So drivers are way underpaid.

  20. So I recently encountered this. I’m located in Chicago and my gf and I were celebrating our 2 year anniversary. As opposed to the traditional ‘full disclose’ that I’m accustomed to, I was ‘quoted’ approximately $10.

    To start, my driver went the wrong way about three blocks. Additionally, she went a relatively longer way to our destination as opposed to using GPS. While shooting the breeze, she communicated that I was actually being charged 1.9x (much to my chagrin). At the end of the day, my fare came close to $14.

    After our wonderful dinner, I decided to take the less than popular Lyft. It was normally priced and less than $7.

    While clever, I find Uber’s new strategy to be less transparent and somewhat unethical. While in major cities, I will be more likely to use Lyft as opposed to Uber.

  21. Here in Hk they just rolled this out. Here surge pricing is the norm due to lack of vehicles so the lack of a surge multiple is frustrating. I used to use uber 4-5 times per week but have used it zero since this new format. Just don’t like the lack of transparency.

  22. I got charged 3x what I normally do yesterday to get home from work (1 15 min. drive via Uber). I didn’t know about the new notification system Uber is using for surge pricing (i.e., I saw nothing and assumed fare was the normal $13). I AM NOT HAPPY. If I’d have known, I would’ve waited out the surge time as I don’t have a lot of money. To clarify, where is the new notification located on the app? Maybe LYFT is the way to go?

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