Uber Starts Charging What It Thinks You’re Willing to Pay

Megalith

Megalith

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Uber is dumping their traditional fare calculation system for one that utilizes machine learning to guess how much a rider is willing to pay for a ride. One example would be a ride from one upper-class area to another, versus traveling between two poorer parts of town: the former, obviously, would cost more. It sounds like a lot of this extra cash will go straight to the company, rather than the driver.

The company detailed for the first time in an interview with Bloomberg a new pricing system that’s been in testing for months in certain cities. On Friday, Uber acknowledged to drivers the discrepancy between their compensation and what riders pay. The new fare system is called “route-based pricing,” and it charges customers based on what it predicts they’re willing to pay. It’s a break from the past, when Uber calculated fares using a combination of mileage, time and multipliers based on geographic demand.
 
It’s a break from the past, when Uber calculated fares using a combination of mileage, time and multipliers based on geographic demand.
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More like a break from what most tried and true business models are using. Travis Kalanick is edgy, I'll give him that.
 
Saturday, 12pm trip home = $6.30
Saturday, 2am trip home, all bars have just closed = $20.30

Seems fair to me.
/s

Where we once were pretty confident the price we got from Uber (or Lyft) would be the lowest, now we have to spend time comparison shopping across all options, including taxis.
 
Skirge01 said:
Saturday, 12pm trip home = $6.30
Saturday, 2am trip home, all bars have just closed = $20.30

Seems fair to me.
/s

Where we once were pretty confident the price we got from Uber (or Lyft) would be the lowest, now we have to spend time comparison shopping across all options, including taxis.
Click to expand...

fair is slightly in the eye of the person. Yes it understandable that you can charge more for different areas at different times. However in that case the drivers should get paid more then. However from even just the little blurb form the article they don't. Uber charges the customer more but pays the driver the same no matter the time or the place. Which isn't "fair" to the drivers, but from a business sense they are in contract to be paid X so they are going to be paid X. Doesn't matter if the company makes more profit or not.

And yes that does require you to shop around but the last thing I want to do when trying to find a ride is get 4 quotes to see what my best option is. I just want to get a rid to get to where I am going.
 
Driver's get a percentage of the increased fare. Pretty sure Lyft driver just ran up his tab by idling 5 blocks away during surge pricing.
 
Skirge01 said:
Saturday, 12pm trip home = $6.30
Saturday, 2am trip home, all bars have just closed = $20.30

Seems fair to me.
/s
Click to expand...

That just seems like supply and demand to me. The "bar closing" slot might see less drivers on the road, but more patrons looking for rides. So in that sense, demand is high, and supply is low, thus the price increases. If I was a driver, I'd need to be paid more to work overnight, as that causes serious life style changes.

The difference between a tech based ride company and a traditional taxi service is that the tech-based one has the advantage of a real-time algorithm to adjust for supply/demand. Where-as a traditional taxi service doesn't.
 
More like, people got used to Uber, use it a lot, and now it's time to cash in on that familiarity.
I can't blame them. However, that'll be the next frontier between them and Lyft. We'll see how it goes.
If my ride increases from a dirt cheap $6 to $8, fine by me. $10? Hmmm. Oh wait I was drinking, yes please!

I do think there's a lot of money on the table. My only complaint is, I liked the really dirt cheap rides.
 
lollerwaffle said:
More like, people got used to Uber, use it a lot, and now it's time to cash in on that familiarity.
I can't blame them. However, that'll be the next frontier between them and Lyft. We'll see how it goes.
If my ride increases from a dirt cheap $6 to $8, fine by me. $10? Hmmm. Oh wait I was drinking, yes please!

I do think there's a lot of money on the table. My only complaint is, I liked the really dirt cheap rides.
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but at what point do you decide that Lyft is better to use all the time or a cab is better to use? Yes not driving can be a better choice but at what point do you decide that you will just go with somebody else
 
Yet another reason I choose to drive for Lyft instead of Uber. Here in San Diego, the number of ride requests you get are about the same for either, and I'd rather work for and promote a company that isn't run by a money grubbing egomaniac. Yes, Lyft likes profits, but not at any cost.
 
I think it actually qualifies as scam. Charging differently for the same service depending on the customer is not edgy, it's probably illegal in many countries. In my country uber is already outlawed, but if they pull this kind of shit they should be outlawed everywhere. Uber, the poster child of what a truly free market is like. Full of backstabbing and unethical practices.
 
If it charges based on "What It Thinks You’re Willing to Pay", then does the other side of the coin apply also? If I check out how much it will cost, and then decide not to use Uber because it's too expensive, will it be cheaper next time?

M76 said:
Uber, the poster child of what a truly free market is like. Full of backstabbing and unethical practices.
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Competition is an important part of the "free market". Luckily, where I live, Lyft is very popular as well. If Uber starts to charge significantly more than Lyft, that will just drive more business to Lyft. THAT is how a free-market is supposed to work.
 
GotNoRice said:
If it charges based on "What It Thinks You’re Willing to Pay", then does the other side of the coin apply also? If I check out how much it will cost, and then decide not to use Uber because it's too expensive, will it be cheaper next time?
Competition is an important part of the "free market". Luckily, where I live, Lyft is very popular as well. If Uber starts to charge significantly more than Lyft, that will just drive more business to Lyft. THAT is how a free-market is supposed to work.
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Sounds great, but every competition produces a winner eventually. And no new upstart can survive in the shadow of an unrestricted monopoly.
And no it won't be cheaper. If that were the case everyone would just order fake transports and decline them to bring the price down.
Uber doesn't care about any single person, if the policy increases income across the board they don't care if they leave a few people out to dry.
 
This seems like discrimination as some people will have to pay more/less than others for the same distance travelled with distance being the largest factor in the cost of the fare to the driver.

Also, will this mean drivers will wage war to get fares in the wealthy neighborhoods just like they do for spots at the airports in some cities/countries?
 
People can complain all they want but this is the free market at work. Competitors need to adapt, but really in this case they may not. Any ride sharing company can come in and tell customers they don't "discriminate" on fares and they should get some of the market that way, and there are other ways to compete.

As for those of you not wanting to shop around for the cheapest, that's unrealistic. No store who sells lots of different commodities sells them cheaper than anyone else. First, before Uber you had ONE "low cost" option if you wanted a private ride - a taxi. Now there are several and taxi companies and drivers are pissed, but they've slowly adapted to compete as have other ride sharing. If you're mad because Uber is no longer the cheapest option all the time that's because you got used to that perception. Since 2011 I have chosen to take a cab over Uber at least 10-15% of the time because I knew they'd be the cheapest - Uber was never the cheapest all the time, not even close. Heck now the taxi companies here in my city tell you in advance an estimated cost. Why? Because of competition.

Expecting to have one place to get the cheapest each and every time is ridiculous. You won't find it. Few if any businesses can survive that way. Uber has lost money every year they've been in business anyway, so their price model likely needs to change.. They have to change to get into the black and they are doing, and in this case it's probably not unethical. Targeting customers who likely won't shop around is smart. They can raise prices without losing customers, the holy grail of business!!
 
Oh look, it's the reason I needed to finally make the switch to Lyft if this actually holds true.

Albeit, I do live well below my means, so if it was cheaper for my given area I guess I wouldn't mind. Curious as to how it determines poor from rich areas. In the urban city I live in you can have rich $1-3 Million homes - and 1 to 2 streets over could be run down and broke.
 
I only use Uber when I have free credits. Or when work is paying for it. Lyft just seems to work better.
 
So I have a standard flight plan I use every 3 months or so. My normal fare from the airport home was always about $18, totally fair for a 20 minute drive across town. Last time it started at $25, I figured I messed up and reloaded the app, suddenly it $35. Figure I must have REALLY screwed up so I relaunch again, now it's $48. At that point I'm like "are they gouging me? Are they preying on a perceived sense of desperation hoping that I'll recognize a skyrocketing price and just settle at the next advertised option?" So I reload it a few more times until I'm all the way at $65 or so, for what is normally an $18 ride home, all within the span of about 5 minutes of clicking.

Obviously I quit the app, waited about 20 minutes so they'd get the picture and recognize I'm probably looking at competitors now, fired it back up and it's down to $19 or so. I take the offer and everything is fine. But man did that shit piss me off and make me seriously reconsider ever using uber again.
 
This makes no sense.

Since when do restaurants charge more the clients that enter the premises with a Rolex?

That the price differs depending on the time-frame, we get it. But that at the same time-frame you charge more or less for XYZ reasons is discrimination. Pure and simple.
 
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