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Uber-Type Surge Pricing Challenged

During rain, rush hour, and even hurricanes, Uber sometimes increases its rates for rides by, say, eight times the normal fare. A ride that would usually cost $65, in a snowstorm, suddenly costs $192. A 20-minute ride, on Halloween, will suddenly set you back $362. Uber doesn’t make these price hikes just to annoy customers, though the strategy certainly at times has had that effect. According to Uber, surge pricing is necessary to incentivize its drivers to get on the road during the busiest times. "Higher prices are required in order to get cars on the road and keep them on the road during the busiest times," Uber CEO Travis Kalanick once wrote on his Facebook page in response to a disgruntled customer who said surge pricing made him or her "OUTRAGED" and "DISGUSTED" (that's not me—it was written in all caps). "This maximizes the number of trips and minimizes the number of people stranded. The drivers have other options as well. In short, without Surge Pricing, there would be no car available at all." Lyft, a competing on-demand car app, has a similar system it calls "Prime Time."



Read the whole story at Fast Company »

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