Dynamic Pricing? More Like A Dynamic Ripoff
Uber’s pricing model is confusing, to say the least. The same trip costs $7 one day and $17 the next. A $10 ride with a few obstacles turns into a $30 ride with no warning. And we’ve all had that moment where we stepped out of our rideshare only to discover that a budget ride turned into a massive blow to our bank account.
In this blog, we’ll explain Uber’s dynamic pricing—and why it’s not all it’s cracked up to be.
What is dynamic pricing?
According to Uber’s website, “Dynamic pricing takes place when several users request a trip in the same area at the same time. Surge is applied for many reasons (during a downpour, sporting events in the city or holidays, etc.).” Basically, this means that even if you take the same route on Uber every day, it won’t always cost the same—Uber can increase the price as demand increases.
This concept of surge pricing is nothing new, even if it’s not referred to by name. Think of discounted matinee tickets, when less people are inclined to see a show or movie, or more expensive tickets for last-minute flights. There’s always been people who dislike the so-called “price gouging” that occurs for purchases such as last-minute bookings, but Uber’s dynamic pricing is especially hated. So why exactly is Uber’s pricing model so controversial?
Dynamic pricing used to be called “surge pricing”, which is arguably much more straightforward and self-explanatory. Although Uber still references “surges” in some of its copy, it has almost entirely rebranded this pricing model as “dynamic pricing”. Which begs the question: what exactly does dynamic mean? On top of sounding less threatening to the customer’s wallet than “surge pricing”, which implies an increase in price, it’s much more misleading.
Surge pricing implies that pricing increases with demand—rush hours, Friday and Saturday nights, sudden downpours. With the rebranded dynamic pricing, the Tag Team has noticed surges at seemingly random times when demand for rides would logically be low—sunny Saturday afternoons, Sunday nights.
How many of us have had a ride that took longer than expected and been hit with an unexpected blow to the bank account after being dropped off? This is another flaw of Uber’s pricing model—while shared Uber Pool rides are static and never change from the originally stated price, standard UberX and UberXL rides can dynamically increase in price over the course of the ride if it takes longer than expected.
There’s also no way to check on the status of your ride’s final cost during the trip, so many riders are in for a nasty surprise when they get out of a ride that was affected by bad traffic, closed roads, or other unforeseen obstacles.
It makes sense that a ride that takes longer than expected will cost more than expected. However, Uber’s confusing and misleading dynamic pricing means that riders are often slammed with ridiculously large charges, turning a $10 ride into a $30 ride, or a $100 ride into a sucker punch straight to the wallet.
But isn’t this good for drivers?
Not really. Uber drivers told The Guardian that, while users were paying a premium for high-demand rides, drivers weren’t making any more from driving during surge hours. Basically, Uber’s high surge prices are a pure price gauge, designed to bring more money to the company without doing anything to help their often underpaid drivers.
Dynamic pricing masquerades under the guise of helping Uber’s drivers and controlling the supply and demand of rides. But at the end of the day, it’s just a misleading rebrand and a dynamic ripoff for riders.
The way a brand treats its consumers speaks volumes—and right now, Uber’s misleading pricing creates a bad brand impression. For many loyal Uber customers, it might be time to take a Lyft.