I think Uber surge pricing is a sham and I believe I can prove it.
Uber surge pricing is, on the face of it, the ultimate articulation of supply and demand economics in action, on steroids. Not enough cars? Pay more and more drivers will get onto the road. The punters? A small price to pay for enhanced service. Is it however- the PPP has his doubts that it is what it says on the tin.
Suspicions begin one freezing cold and wet Tuesday morning, 0430 am. At this time every second week, the PPP begins his ‘Uber ritual’. This involves me opening the app to book a car. The app responds with ‘demand is off the charts right now, fares have increased to get more Ubers on the road.’ This is the ritual you see, as I pinch the screen of my iDevice to see how many cars are around [usually none] and then I shut the app, reopening it two minutes later. This Tuesday pattern is actually not too bad, as I usually only have to wait 4 or 5 rotations, or 8 to 10 minutes, for the surge pricing to drop off completely.
On the morning in question, there was one car, about 800 metres from my house, but heading away. ‘Drat’ thinks I, ‘if it wasn’t surge pricing, that car could be heading to my house and I would not be freezing in the street.’ [for, dear reader, I am nothing if not a good client; I never order a car until I am outside waiting for it, so as to not keep the driver waiting]. Several iterations of the ritual later, during which the sole Uber on screen is increasingly distancing itself from my house, surge pricing drops and bang! the PPP pounces [alliteration]. Pinching my screen to see how far away my ride is, I notice the still sole car, the one I have been tracking, has turned around, some 5 km from my house and is heading back my way! Can’t be true surely? Oh yeah, that car comes and picks me up. So relate my tale to the driver, confirming that it was indeed his car I had been tracking. I said to him that it was a pity that surge pricing was up as he could have saved himself 10 km and a few minutes and I would have been warmer quicker. His telling response was ‘and I would have welcomed the job 10 minutes earlier, even at non-surge pricing.’ Ok so not much to go on really, but how can there be a loose car, no job for him in the area AND surge pricing?
Fast-forward to July 2016 and Copenhagen, Denmark. [Uber ‘Pop’ and they don’t take PayPal- don’t ask me how I discovered this.]
I request an Uber, to find surge pricing. Drat again. Since Denmark, as lovely as it is, should have a ‘surge pricing’ applied to any holiday there due to its high prices, I go through my ritual of shutting and re- opening the app on a two minute cycle. Would not want to pay surge prices in Scandanivia in general. About a few rotations into this cycle [the longest in fact I have waited for surge pricing to drop], I notice a surplus of cars in my area so I took some screen shots, to illustrate my theory. Note that these screen shots are about mid-way through the ritual.
Photo one. Note time and the 5 Ubers
Photo Two. Two minutes later. I think the same five Ubers. Two of them appear to have got lucky and are off for jobs.
Photo Three. Isn’t that the same two cars at the bottom of the screen reconverging? There is a fifth one still, hidden under the black bar.
For the avoidance of doubt, surge pricing applied.
Tell me that’s not the same 5 Ubers. Prices went back to normal so I got one this time.
So, looking at the screenshots, how do you explain this? Five cars, I think the very same 5 cars are proximate to me; they are not going anywhere, yet surge pricing is in play. How so? After waiting them out, the pricing dropped to normal and I snaffled one of them.
The PPP, usually not short of an opinion or two, is totally mystified by this. Does anyone know what forces are at play here? I do have two tentative theories:
Uber is playing in the same space as Pokémon, that is, by entertaining its potential guests with mind games to make the passing of the time a bit better to bear. I do see my ritual as ‘find the normal priced Uber’ and get a great satisfaction out of succeeding. Perhaps it keeps me happy and engaged while waiting.
That Uber is selling some customers who would not normally buy at surge prices a surge price for that trip. On this occasion in Copenhagen for example, the surge multiplier was 1.5 X. It then dropped to 1.3X. I wonder if this makes customers think they are saving money: ‘Price drop- trip to the airport was 1.5X, now only 1.3X, save 20%!’
My posts get up to 9 reads, nope, seriously. I would appreciate other theories as mine above don’t really stack up. What could explain my Danish experience?
And, does anybody actually page surge prices, at least when sober?