Tag Archives: uber surge pricing

Gouge Away: Uber’s Surge Pricing from a Driver’s Perspective

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Originally appeared on Disinfo.com

 

During the recent hostage crisis in Sydney, due to increased demand, Uber’s surge pricing took effect. Understandably, people wanted to get the hell out of dodge. Fast! Since then, there have been a slew of articles lambasting Uber’s “dynamic pricing” model. Surge pricing, especially during a terrorist threat, always rubs the public the wrong way. And yet, various writers have come to Uber’s defense, arguing that surge pricing is simply an example of supply and demand.

The Daily Beast’s Olivia Nuzzi wrote:

“Uber does not have a responsibility to care about you. Uber is not a government entity, and it is not beholden to the general carless public during an unwelcome drizzle of rain or even a time of great distress.”

Matthew Feeney, with the Cato Institute, the Koch-founded libertarian think tank, wrote on their blog:

“What is great about a pricing system like Uber’s surge pricing is that it allows users who want an Uber ride the most to have it. Prices are a great way of communicating customer preferences.”

Fair enough. In Econ 101, you learn all about supply and demand. On paper, surge pricing makes total sense. But corporate boosters like Feeney are missing some major factors that obviously aren’t apparent from the exalted view of an ivory tower. Namely, Uber isn’t a $40 billion company because it’s the Grey Poupon of urban transportation. Not only do they hope to take the place of traditional taxi service, Uber wants to replace car ownership altogether. How can they do that with part-time drivers whose only incentive to drive is the opportunity to gouge people desperate enough to pay whatever it takes to get home?

The fact is, Uber drivers don’t make shit during regular, non-surge, times. I’ve been driving for Uber long enough to remember when ridesharing was somewhat profitable. Over the course of a year, in order to corner the rideshare market, Uber has maintained a protracted price war with Lyft, Sidecar and even, it would seem, the city bus. Since then, the constant price cuts have made it nearly impossible to earn a decent living as a rideshare driver. Prior to the price wars, I made $800 to $1000 a week driving thirty to thirty-five hours. (Before expenses like gas, tolls, car washes, maintenance, etc.) Now, driving for the same amount of time, it’s more like $400 or $500. If I’m lucky. (Again, before expenses.)

As an Uber driver, you learn quickly that it doesn’t pay to pick up passengers unless prices are surging. There are blogs and even driving coaches who offer to help new drivers figure out the best driving strategies. They all say the same thing: wait for the surge.

Surge pricing is so ingrained into the Uber culture, they are even trying to patent it!

Chasing the Surge

In online forums for drivers, trying to figure out when prices will surge is a regular topic of discussion. So far, the only proven method to ensure getting a ride during a surge is to stay offline and monitor the rider app. Once a part of town lights up, you race there in hopes of getting a higher fare. This is called “chasing the surge.”

Most drivers chase the surge. On Facebook groups, drivers like to post screengrabs of high-ticket fares during price surges. Members click “like” and make comments such as, “Lucky you!” or “I wish I weren’t already in bed or I’d get in my car right now!”

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Since surge pricing forces generosity from people who would otherwise not give you a penny more than what the app determines, it’s no wonder drivers revel in it and respond to high fares like they just won the lottery.

By continuing to lower rates, Uber knows the only way drivers can make money is during a surge. When demand is expected to be high or when it spikes, Uber encourages drivers to get behind the wheel by sending texts like this:

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The same thing happens during music festivals, sporting events, inclement weather or just a busy Saturday night:

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You can’t help but wonder if Sydney drivers received similar texts. “Siege downtown! Expect high demand! Don’t forget to give promo codes to the desperate suckers at bus stops. You’ll make an extra $5!”

From all the comments I’ve seen, most drivers don’t care if passengers have to pay more—or a LOT more—when demand is high. The extra money makes up for all the times people didn’t have to pay much for the luxury of being driven around town, oftentimes receiving water and snacks along the way.

I’ve always been ambivalent about Uber’s surge pricing model. Personally, I’d much rather let the passenger decide how much my service is worth during busier times with a tip. However, despite the extremely vocal complaints of drivers, including protests outside Uber’s offices across the country, Uber will most likely never add a tip option to the app. In fact, this December, Uber added an option for passengers to include a donation to the No Kid Hungry campaignIt was all set up through the app. No disrespect to the No Kid Hungry organization, but if Uber can easily add a feature like this, they could just as easily include a tip option. But they won’t do it because, as they have made it clear over and over, “Being Uber means there is no need to tip drivers with any of our services.”

Regardless of what Uber CEO Travis Kalanick thinks is a better model for transportation, driving is a service-based task. While passengers seem happy to go along with this no-tipping rule, I don’t imagine they would be as comfortable stiffing a bartender or food server on a tip. So why do it to rideshare drivers? It’s not like we’re making more than minimum wage. Unless, of course, the prices are surging.

Why can’t Uber just raise the fares, or lower their cut, and create an incentive for drivers to work all the time? Wouldn’t the supply and demand concept work then as well? On slow nights, when demand is low, most drivers would log out and the diehards would keep driving, thereby leveling out supply.

I may not have an advanced degree in economics, but I know that Uber’s business model is not just unfair to drivers, it’s unfair to riders as well. At some point, most people will realize they’re being exploited. Telling passengers they don’t have to tip their driver and then forcing them to pay more when it’s busy is a seesaw battle of extortion: I screw you when I can and you screw me when you can.

The no-tip aspect may seem like a good idea to the consumer during normal times, but what about when they’re looking at a $100 dollar fare to go a few miles? Suddenly, tossing a few extra bucks to your driver doesn’t seem like that big of a deal anymore.

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My highest fare… from downtown to the Richmond District in the the rain with 3.4 surge. During non-surge, this ride would normally be around $15.00.

For more nitty-gritty details on the life of an Uber/Lyft driver, check out my blog. Or follow me on twitter.

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The Uber You Reap Is The Uber You Sow

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I never thought it would happen, but I’m officially sick of reading about Uber. When I mentioned this to the Wife, she quickly replied, “Now you know how I feel.” Fair enough. I have been somewhat obsessed with Uber and Lyft. I’m a driver. It’s hard not to think (and blog) about the injustices we face every day at the hands of these two companies.

Since I first considered driving back in December of 2013, I’ve been reading every article about ridesharing that has crossed my Facebook and Twitter feeds. And since March, when I finally took the plunge and got behind the wheel, I’ve joined all the driver groups I could find and followed numerous sites and writers who cover ridesharing.

Needless to say, I was not shocked by the latest Uber scandal, when vice-president Emil Michael’s suggestion that they hire reporters of their own to go after reporters who are critical of Uber. Just another day following the Uber train of disaster.

Since then, the articles, tweets, updates and blog posts about this incident have been nonstop. Seriously, I’ve reached maximum Uber overload. Can we just go on to the next scandal already? I’m sure there will be more…

Granted, this one is pretty horrendous. If I were Sarah Lacy, the designated target of this doxx campaign, I’d be furious. Livid. Outraged. Pissed the fucked off! Everybody should be. It’s bad. Real bad.

So bad that people are now deleting their Uber accounts. Going so far as to figure out how to permanently remove their data from Uber’s servers. Because, surprise, surprise, Uber doesn’t just go away when you delete the app from your phone. Uber stores your information for “legitimate business purposes.”

Yeah right.

Well, people, before you feel high and mighty because you’ve deleted the app and possibly gone as far as to contact Uber and have your data removed, think about this: it’s your fault.

What Emil Michael said was unconscionable. But it wouldn’t have happened if all these loyal Uber users weren’t so happy to play along with their disruptive business model. It’s not that shocking when you think about all the shit Uber has done before.

The drivers know. We’ve been fighting with Uber for a while now. But nobody cares about us. Or our puny little problems. But attack that venerable institution of online reporting and the OUTRAGE! The HORROR! OH MY FUCKING GOD! BRING ME THE HEAD OF EMIL MICHAEL!!!

So let’s see…

And much, much more

With Uber, there’s always more. These are the incidents that popped up in my mind as I bashed out this blog post. But do I really need to go on?

All that is chill, but when they threaten to dig up dirt on a reporter, people freak the fuck out and delete the app?

Come on! What did you expect from a company that has done all these shady things? And no doubt has many more shady things in the works. (UberScholar, anyone?) Yeah.

Everybody sat back and let it happen. You fed the Uber monster. And now that monster is so big, it doesn’t matter if a few users delete the app. It’s too late for Uber’s comeuppance. You created this monster. It’s here to stay.

And don’t get me wrong: Fuck Uber. Nothing would give me more pleasure than to see this behemoth fail. Even if that means getting a new source of income. As Hector the dishwasher told me many years ago, “I was looking for a job when I found this one…”

So delete away, folks. But when you click that “Delete” button, maybe have at least a little consideration for all the other Uber victims. And the drivers. We do matter. Just a little bit, right?

Trick or Treat: Lyft Wants ME to Be a Mentor?

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I have to say, I’m somewhat flattered that Lyft took the time to email me the morning after Halloween with an invitation to be a Mentor. On what was supposed to be the busiest night of the year for ridesharing, Lyft had to deal with a server outage that caused snafus for drivers and passengers alike. Then there was the Sacramento passenger who died in a wreck on the freeway. This is Lyft’s first fatality. And the first rideshare passenger killed during a ride.

It was a hell of a night for Uber too. Their servers also went down worldwide. And they had to fend off the usual criticism for surge pricing.

On top of all that, both Lyft and Uber were offering drivers an hourly guarantee. In San Francisco, it was forty bucks.

Despite the guarantee, I stayed home and watched slasher flicks with the Wife. We did Halloween, Halloween 2, Scream and Scream 2.

The next morning, the Facebook groups were inundated with screenshots of extremely high fares. Once the server issues were sorted out, prices surged 5x in San Francisco and LA. In other cities, they went as high as 9x. Drivers who powered through the glitches took home some serious treats. While several passengers were just tricked.

I felt a mild pang of disappointment that I missed out on the shit show, but the email from Lyft certainly raised my spirits. In fact, I laughed my ass off. I have to assume it was another server error. I mean, really… They want ME to be a Mentor? Me? The person who continuously trashes their brand? Who made fun of the Pacific Driver Lounge? And who wrote a scathing post that sent all the Lyft loyalists into such a tizzy? Me?

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Are they completely out of their fucking minds?

I’m tempted to accept the invitation just to see if they would actually approve me. And if they did… Well, that would only validate my theory that Lyft and Uber don’t give two shits what you say about them online. Regardless of what many think, we work for a computer. All that matters is how well you drive. And as far as Lyft’s algorithm is concerned, I’m good enough to be a Lyft Mentor.

Me!

Outside Lands and The Uber/Lyft Feeding Frenzy

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Before the Outside Lands festival was even over, numerous articles started popping up on sites like ValleyWag, SF Weekly and SFist about ridiculously high fares due to Uber’s surge pricing. Each night after the event let out surge pricing got up to 5 times the normal rate. Online, everybody freaked out over a couple pics of some pretty high fares. Uber was portrayed as the bad guy, ripping off decent festivalgoers that just wanted to get home.

Yeah, it’s easy to hate on Uber. And plenty of commenters lambasted the spoiled passengers who couldn’t be bothered to take public transportation. Or walk. Or ride a bike. Though if they’d seen the mobs around the bus stops on Geary, they might have held back on some of that criticism. Those poor saps weren’t going anywhere anytime soon. Still, is it better to be a sucker? No. But another factor that’s being overlooked in all this brouhaha is that these high fares were not just the direct result of surge pricing. They are also a consequence of drivers coming into the city to work the event and not knowing how to navigate the streets.

I know that drivers are supposed to stick up for fellow drivers, but if fares are surging even two times the normal rate, do you want somebody behind the wheel who knows how to get you where you’re going in the most efficient, least expensive way possible or a driver who would be completely lost without Waze or Google Maps?

I don’t deny that navigation apps can be useful. But they can only help so much during major traffic jams. Even an app like Waze that updates itself in real time with user input is dependent on the users’ familiarity with the streets they are driving. You don’t need an app to tell you traffic sucks when you can just look outside your window. There are many options when driving through a city. Not just the fastest and the shortest. Experienced drivers know alternate routes and how to avoid traffic from driving the streets regularly.

I had several passengers over the weekend tell me they’d gotten the runaround from out-of-town drivers. One guy told me his previous driver didn’t even know how to get to Golden Gate Park! He tried to direct her but she insisted on using navigation, so they had to find an address that corresponded with the park. Locals know when their drivers are lost, but what about all those thousands of passengers who flew into San Francisco for Outside Lands? They had no clue where they were going and were just as disoriented as their drivers.

In the example above, a driver used the Great Hwy and Sloat to get from the Richmond to Castro/Upper Market. That driver turned a four mile ride into eleven miles. Even if they were trying to avoid traffic, there’s no reason to go that far out of your way. Personally, I’d go through Laurel Heights, Nopa or Anza Vista. I drove all over those areas during Outside Lands and the streets were not that congested. Sure, there are more stop signs on side streets. But is it better to stop and drive or stop and stop and go a few feet then stop again, over and over, all the way out of the Richmond District? Geary, Lincoln, Fulton and the other major boulevards were a sea of red lights. During an event of this caliber, avoiding the major streets and using alternate routes is a no-brainer. But, hey, if drivers are in the city just to squeeze as much out of price surging as possible, then why bother making the rides shorter?

While those drivers taking home hundreds of dollars from this event should be ashamed of themselves if those fares were jacked up due to their own ineptitude as a driver, another important part of the story left out of these articles about price surging is that these inflated fares during Outside Lands were from rides in UberBlack towncars or UberXL SUVs.

Face it: if you want to feel money, you have to pay the price.

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But many UberX drivers saw fares in the $90 range. From what I witnessed during the event, these drivers must have been picking up passengers deep in the mess of traffic, during the highest surges. And like UberBlack and UberXL users, those passengers deserve to pay more because they know they’re requesting a car at the worst possible moment. The app tells them as much. It’s stupid for them to complain. The savvy rideshare users were the ones who walked out of the congestion, waited for the surge to go down, or just used Lyft, whose Prime Time never seemed to go past 75%.

I had one group of passengers walk towards me as I drove to their location, making it easier to pick them up without getting too caught up in the traffic near the festival entrance/exit, where the madness had to have been nuts. I have no idea what it was like there because I never ventured close enough. I’m sure it was a clusterfuck of towncars, Uber sedans and mustachioed Lyft cars. Only inexperienced and greedy drivers would attempt to participate in a feeding frenzy like that.

The Outside Lands Gambit

I don’t usually deal with the hassle of festivals in the city, but I thought I’d give Outside Lands a chance. I did Friday and Saturday. I started in the early afternoon and drove until one AM. Financially, it was the worst weekend I’ve had in a while. Even though I never once got stuck in traffic, despite circumventing other rideshare drivers maneuvering the streets like chickens with their heads cut off, the most expensive ride I gave was $37. From mid-Richmond to North Beach.

While the festival was in full-swing, there was very little business in the city. It was only when the festival let out that the requests started coming in. I was in the Richmond during the infamous 5x surge. I waited five minutes with the Uber app open, but I got no requests. I’ve adhered to a simple rule since I started driving for both platforms. If I wait longer than five minutes for a request with only one app open, I turn on the other and take the first request one I get. Seconds after turning on Lyft, I got a request. I drove to the location but nobody was there looking for me. I clicked the “arrive” notification but the app told me I wasn’t at the location. I zoomed in on the map. My GPS blue dot was on top of the passenger icon. I could not have gotten any closer to the pinged location. I clicked arrive again. Still, the app told me I wasn’t there. I started getting service problem alerts. I tried calling the passenger. The app crashed. I opened it back up and canceled the request. As soon I did, I got another request. I tried to accept it but the app kept telling me to wait. I tried to get out of driver mode but the app wouldn’t let me. Another request came in for a location on the other side of the park. There was no way I could get there in a reasonable time so I let it time out and tried to go out of driver mode again. The app still wouldn’t cooperate. So I shut off my phone, did a hard restart and left the area. Drove north, away from the park. After restarting my phone, I opened the app and a request was already coming in. On Lake and 25th. I accepted it and was able to complete the $27.00 ride.

That was about all I could take of Outside Lands for one day.

The second night, during what I thought was a 3x surge, I drove a couple from mid-Richmond to Japantown. I easily avoided traffic jams, I got them to their hotel quickly with a few suggestions for where to grab a decent breakfast in the morning. Turned out the surge was actually 1.25x and the fare was just $13.07.

I spent the rest of the night moving passengers around downtown and the Mission. I’m sure I could have made more money if I’d kept going back to the Richmond or Sunset districts, but the potential higher fares just weren’t worth the headache.

Chasing The Surge

I’ve always been ambivalent about Uber’s surge pricing and Lyft’s prime time. I get the concept of supply and demand, but I’d much rather let the passenger decide how much my service is worth during busy times with a tip. Most drivers chase the surge. There are driver groups on Facebook devoted to posting screengrabs of high-ticket fares during price surges. Posters click “like” and make comments like, “Lucky you!” or “I wish I weren’t already in bed or I’d get in my car right now!”

10378921_10202391708502677_424282169277337062_nSurge pricing forces generosity from people who would otherwise not give you a penny more than what is required. And since Uber discourages tipping, that amount is whatever comes up on the app. Surge pricing is the only time drivers get more than what the app determines. So it’s no wonder they revel in it and respond to high fares like they just won the lottery.

While Lyft at least has the option to tip in the app, Uber is sticking to the no-tip rule. They even discourage drivers from accepting cash tips when passengers offer them. There are even some drivers who follow that rule.

Regardless of what Travis Kalanick thinks is a better model for transportation, driving is a service-based task. Only assholes stiff service workers on tips. So who cares if they have to pay more—or a LOT more—when demand is high? Doesn’t the extra money make up for all the times they didn’t have to pay extra for the luxury of being driven around town, oftentimes receiving water and snacks along the way?

Perhaps, but telling riders they don’t have to tip and then forcing them to tip when it’s busy is ass backwards. Why did Uber take tipping out of the equation anyway? It’s not like we’re getting paid more than taxi drivers. You wouldn’t stiff a cab driver on a tip, so why do it to Uber and Lyft drivers?

The no-tip rule is an absurd aspect of Uber’s business model. It may seem like a good idea to the consumer during normal times, but what about when they’re looking at a $400 dollar fare? Tossing a few extra bucks to your driver doesn’t seem like that big of a deal anymore.