For the record, I love Uber. I don’t use it often, but it’s there when I need to get further than I can walk and I don’t want to deal with the hassle of renting a car or using public transit. The cost is less than what I used to spend on owning and maintaining my own vehicle. And it’s far more convenient and comfortable than using taxis.
There was an interesting article in last week’s issue of The Economist (my goal each week is to finish reading before the next issue arrives) discussing whether the surge pricing that Uber implements during peak demand makes good business sense. In theory, it creates incentive for more drivers to hit the road, while those vehicles are made more available to those customers most willing to pay.
The Economist takes the position that the problem is not with surge pricing but rather Uber’s fee structure. As long as the difference is great enough between what customers will pay and what drivers will accept then Uber can take a sizable fraction and everyone still walks away happy. They suggest this is less likely the case during peak demand when the difference may narrow.
Anyway, it’s an interesting perspective. My own opinion is that surge pricing is fine, and The Economist may have a point about implementing something closer to a flat fee. Drivers are working late. Customers are in greater need of a ride. But what exactly is Uber doing differently at 2 AM vs. 2 PM?
Fortunately I haven’t had to suffer from surge pricing yet, but it was an interesting read in the context of other news that Uber is raising its (regular) prices in New York.
Comments
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