{"id":3519,"date":"2015-10-20T10:30:16","date_gmt":"2015-10-20T14:30:16","guid":{"rendered":"http:\/\/www.taxifarefinder.com\/newsroom\/?p=3519"},"modified":"2015-10-20T10:30:16","modified_gmt":"2015-10-20T14:30:16","slug":"would-uber-be-better-without-surge-pricing","status":"publish","type":"post","link":"https:\/\/www.taxifarefinder.com\/newsroom\/2015\/10\/20\/would-uber-be-better-without-surge-pricing\/","title":{"rendered":"Would Uber Be Better Without Surge Pricing?"},"content":{"rendered":"

\"\"<\/a>Over the past couple years, the term \u2018surge\u2019 has taken on a whole new meaning. \u00a0If you\u2019re not familiar with why it\u2019s so famous, surge is a feature of the popular ridesharing\u00a0app Uber, and it\u00a0signifies increased pricing during times of high demand.<\/p>\n

According to Uber\u2019s website<\/a>, \u201cAt times of high demand, the number of drivers we can connect you with becomes limited. As a result, prices increase to encourage more drivers to become available.\u201d \u00a0On the surface, it sounds simple enough: when demand for rides outweighs available drivers, Uber raises prices to get more drivers on the road.<\/p>\n

But as research has proven<\/a>, surge actually turns out to be more of a re-distribution of drivers than anything else. \u00a0And veteran Uber drivers know that it\u2019s a fool\u2019s errand to chase the surge.<\/p>\n

Christian Perea, an Uber driver who\u2019s driven in\u00a0three major cities, told me, \u201cWise drivers do not chase surge. They do their homework and patiently anticipate it. I only move towards surge areas if they are within five minutes driving distance or if I know that there is a high likelihood of consistent surge for a period of time.\u201d<\/p>\n

\"Would<\/p>\n

So When Does Surge Work?<\/strong><\/p>\n

Since surge pricing can be so dynamic<\/a>, it doesn\u2019t work all that well to get drivers off the couch (because it could easily disappear after just one ride). \u00a0But it does entice drivers to come out during the biggest events (like New Years or\u00a0Lollapalooza) and during the busiest times (like the Saturday night closing\u00a0bar rush when everyone wants to get home).<\/p>\n

Driving the party hours (Friday and Saturday nights) is notorious for unruly passengers and drunken rides but there also tends to be a lot of surge. \u00a0Uber drivers work these hours because they anticipate increased demand and surge pricing. \u00a0I know that I wouldn\u2019t drive<\/a> a bunch of drunks around until 3 am if I could make the same amount at 2 pm on a Friday.<\/p>\n

But while drivers tend to love surge, those same feelings are rarely shared by passengers. \u00a0New Year\u2019s Eve is often\u00a0a prime example of this with fares surging all the way up to 8.9x<\/a> in certain parts of the country. \u00a0A quick sampling on Twitter would tell you that there were a lot of pissed off passengers too.<\/p>\n

But Surge Is Great For Drivers Right?<\/strong><\/p>\n

You might think that an Uber driver who earns $89 for a fare that normally costs $10 would be happy about that. \u00a0But to them, it feels like Uber is going overboard.<\/p>\n

Perea told me, \u201cSurge isn\u2019t as important to me. \u00a0I would rather see higher base fares and minimum fares. A driver should get $5 from each ride, seeing payouts for $3.20 on a minimum fare is outright insulting. Especially since they occur often in densely populated areas where it is most difficult and dangerous to drive.\u201d<\/p>\n

Perea is referring to the fact that on a $5 minimum fare, drivers only receive a $3.20 payout after Uber\u2019s $1 safe rides fee and 20% commission. \u00a0It\u2019s also interesting to note that fares have been cut up to 50% in certain cities like San Francisco over the past year so a 2.0x surge fare today is actually\u00a0the same price as a regular ride was last year.<\/p>\n

Should Surge Be Capped?<\/strong><\/p>\n

This week, NYC Mayor, Bill de Blasio, fresh off a swift defeat at the hands of Uber, proposed a cap<\/a> on Uber\u2019s surge pricing. \u00a0His last tussle with Uber involved limiting the number of Uber cars available in NYC but that was met by a flurry of lobbying from Uber and pressure from NYC residents. \u00a0Ultimately, De Blasio\u00a0backed down on that initiative.<\/p>\n

This new strategy to limit surge appears on the surface to target and win over consumers who have legitimate gripes about surge pricing. \u00a0But again, it could end up back-firing. \u00a0Without surge, there is really no incentive for drivers to be out on the road during times of peak demand which means rides aren\u2019t even available for customers.<\/p>\n

Uber has also made it very clear that they oppose any and all restrictions\u00a0that would cap fares during times other than an emergency like an earthquake.<\/p>\n

Should Uber Get Rid of Surge?<\/strong><\/p>\n

Uber is one of the most consumer-friendly companies out there today. \u00a0But the one area where they\u2019ve refused to back down from, is surge, which tells me they must know something that we don\u2019t. \u00a0According to a blog post<\/a> by Bill Gurley in 2014, Uber recognized this problem early on.<\/p>\n

Many of their drivers were logging off and going home\u00a0at 1 am,\u00a0just as all of the partygoers needed a ride home. \u00a0Asking drivers nicely to stay online didn\u2019t work, but when they offered a 2-3x premium, low and behold, 2\/3 of their unfilled requests were now being filled. \u00a0It turned out that drivers were responding to price elasticity.<\/p>\n

Gurley also noted that \u201cthe next time you see a message indicating that Uber\u2019s surge pricing is in effect: immediately try an alternative other than Uber. In other words, try to hail a cab, call a traditional black car service, find a rental car, or jump on a bus or subway. You will find that availability and reliability for all forms of transportation are under stress at that same precise moment in time. At these times, a fixed price taxi will be highly unavailable, and a fixed price subway will be remarkably over-crowded.\u201d<\/p>\n

And there in lies the reason why Uber shouldn\u2019t ever get rid of surge and won\u2019t. \u00a0Uber\u2019s number one priority is being reliable and surge pricing makes it so that you can always get a ride when you need it.<\/p>\n

There are a lot of passengers who complain about surge pricing but clearly they are still willing to pay it (otherwise they wouldn\u2019t have taken the ride in the first place). \u00a0Uber has even gone to great lengths to make sure that riders understand and are aware of surge pricing. \u00a0Riders have to physically type in the surge multiplier when requesting a surge ride and they also now have the option of being notified once the surge goes down.<\/p>\n

All of these changes have made surge more rider friendly and although it\u2019s still an aggravating feature of Uber, it appears as if it\u2019s\u00a0an essential part of balancing supply and demand.<\/p>\n

 <\/p>\n

\"\"About Harry Campbell, The RideShare Guy<\/em><\/strong><\/p>\n

Hello TFF Readers, my name is Harry Campbell and I run a blog for rideshare <\/em>drivers called The Rideshare Guy<\/a> and I also write about the on demand economy for Forbes<\/a>.\u00a0 I\u2019ll be <\/em>sharing articles from time to time on what\u2019s going on in the world of rideshare and what you need to know as a passenger whether you enjoy taxis, rideshare or all of the above!<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Over the past couple years, the term \u2018surge\u2019 has taken on a whole new meaning. \u00a0If you\u2019re not familiar with why it\u2019s so famous, surge is a feature of the popular ridesharing\u00a0app Uber, and it\u00a0signifies increased pricing during times of high demand. According to Uber\u2019s website, \u201cAt times of high demand, the number of drivers […]<\/p>\n","protected":false},"author":4,"featured_media":2889,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[116],"tags":[382,210,104,10,226,381,269,12,15,286,383,380],"_links":{"self":[{"href":"https:\/\/www.taxifarefinder.com\/newsroom\/wp-json\/wp\/v2\/posts\/3519"}],"collection":[{"href":"https:\/\/www.taxifarefinder.com\/newsroom\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxifarefinder.com\/newsroom\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxifarefinder.com\/newsroom\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxifarefinder.com\/newsroom\/wp-json\/wp\/v2\/comments?post=3519"}],"version-history":[{"count":6,"href":"https:\/\/www.taxifarefinder.com\/newsroom\/wp-json\/wp\/v2\/posts\/3519\/revisions"}],"predecessor-version":[{"id":3526,"href":"https:\/\/www.taxifarefinder.com\/newsroom\/wp-json\/wp\/v2\/posts\/3519\/revisions\/3526"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.taxifarefinder.com\/newsroom\/wp-json\/wp\/v2\/media\/2889"}],"wp:attachment":[{"href":"https:\/\/www.taxifarefinder.com\/newsroom\/wp-json\/wp\/v2\/media?parent=3519"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxifarefinder.com\/newsroom\/wp-json\/wp\/v2\/categories?post=3519"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxifarefinder.com\/newsroom\/wp-json\/wp\/v2\/tags?post=3519"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}