Uber Starts Charging What It Thinks You're Willing To Pay (bloomberg.com)

An anonymous reader quotes a report from Motherboard: Uber drivers have been complaining that the gap between the fare a rider pays and what the driver receives is getting wider. After months of unsatisfying answers, Uber is providing an explanation: It's charging some passengers more because it needs the extra cash. The company detailed for the first time in an interview with Bloomberg a new pricing system that's been in testing for months in certain cities. On Friday, Uber acknowledged to drivers the discrepancy between their compensation and what riders pay. The new fare system is called "route-based pricing," and it charges customers based on what it predicts they're willing to pay. It's a break from the past, when Uber calculated fares using a combination of mileage, time and multipliers based on geographic demand. Daniel Graf, Uber's head of product, said the company applies machine-learning techniques to estimate how much groups of customers are willing to shell out for a ride. Uber calculates riders' propensity for paying a higher price for a particular route at a certain time of day. For instance, someone traveling from a wealthy neighborhood to another tony spot might be asked to pay more than another person heading to a poorer part of town, even if demand, traffic and distance are the same.

Comments

Don't think Uber will be alone with this

[NotInHere]

Other companies will adopt this as well. They will charge you what you are willing to pay them. You won't even be safe outside of the online world, in retail shops the price tags will adopt depending on the time of day and maybe even, combined with face tracking, who is around.

Re:Don't think Uber will be alone with this

[TWX]

This is why taxi companies have to post rates and those rates are based on a combination of time and odometer, at least in many jurisdictions it's mandatory for them to do this.

Uber is once again demonstrating why we have passenger livery laws, and in this case it might well be the first time that flouting it has a strong effect that's really felt by the customer.

Re:Don't think Uber will be alone with this

[Anonymous Coward]

the gap between the fare a rider pays and what the driver receives is getting wider.

Uber's profit margin is none of the driver's business. Don't get me wrong, I'm not defending Uber. I think they're scumbags and you shouldn't work for them. And if you don't think Uber is paying you enough, then that's another good reason to not work for them.

Re:Don't think Uber will be alone with this

[Beau1080p]

Orbitz started doing this in 2012

Re:Don't think Uber will be alone with this

[ShanghaiBill]

Other companies will adopt this as well. They will charge you what you are willing to pay them.

This is terrible. Someday, even flea markets and third world village produce stalls will start negotiating prices based on what they think you are willing to pay. We will look back to 2017 as the end of innocence, when Uber became the first company in history to discover price discrimination.

Re:Don't think Uber will be alone with this

[ShanghaiBill]

Don't get me wrong, I'm not defending Uber.

You should defend them. They have every right to charge what the market will bear. They have every right to pay their employees what the market will bear. They are a business, not a charity.

If you don't like what they charge, then use Lyft, or take a taxi, or walk. If you don't like what they pay, then go work elsewhere.

Disclaimer: I use Lyft. I hate Uber. But although I don't like what they charge, I will defend their right to charge it (although, unlike Voltaire, not to the death).

Re:Don't think Uber will be alone with this

[Grishnakh]

Yeah, but the thing here is that while Uber's profit margin is really their own business, and they can charge what they like, they actually have a negative profit margin: the drivers are paid *more* than what the company is taking in from riders (at least, that's what I keep reading). That's not sustainable. But that's between Uber and their silly investors.

Re:Don't think Uber will be alone with this

[Ol Olsoc]

I'm not willing to pay anything. Looking forward to free rides from Uber.

Re:Don't think Uber will be alone with this

[SirSlud]

It's really weird to me that people think that the fact that it's their right has anything to do with this discussion. The question isn't if it's their right, it's if they're exercising their rights in a way people are free to disagree with. And saying it's none of our business is a curious moot position to take: they volunteered the information. It's like somebody saying something really stupid, and you present a counter argument, and people say, "Yeah but, they have the right to say whatever they want." Yes they do. What does that have to do with breaking down what they said?

Re:Don't think Uber will be alone with this

[Dunbal]

They have every right to charge what the market will bear.

The customer has the right to know how much it will cost before the transaction occurs.

Re: Don't think Uber will be alone with this

[gweilo8888]

Yes, they do. Your taxi has a set rate for every mile driven, a set rate for every minute of waiting, and a set rate for any addons like baggage etc.

Re:Don't think Uber will be alone with this

[TWX]

That's not true that no one has batted an eye, and it's also not entirely true that airlines have been doing exactly this either.

If I understand Uber and its ilk, the amount of time between booking a ride and taking the ride is short, minutes to hours, to the point that it's essentially a single act. By contrast, the amount of time between booking an airline seat and taking the flight is usually days or weeks, and sometimes even months, and since airlines themselves are financially tied to the aircraft (either leasing or outright ownership) they are paying for the the vehicle in addition to the staffing and everything else; the airline takes on the financial risk. Fares start low-ish to attract travelers, rise as time to the flight shortens, then may plummet reasonably close to the flight to try to fill-in seats, then skyrocket in the last couple of hours to profit off of demand for last-minute bookings before getting even cheaper as standby passengers are booked.

I do not care for how airlines price fares, but since airlines are the entity bearing the financial burden of the entire aspect of the flight then I am less annoyed by it. Uber doesn't own the cars, doesn't pay salaries to the drivers whether they're driving or not. If Uber is pushing the financial aspect of the risk to the drivers then it shouldn't claim one thing to the passenger and another thing to the driver.

"How much will that be..?"

[Dutchmaan]

"...How much you got!?"

(I think they call this a shake down)

Regulated Taxis

[Anonymous Coward]

So now do you understand why taxi companies are regulated?

Re:Regulated Taxis

[Luthair]

Pretty much this, we ended up with regulated rates because when taxis did what they wanted we ended up with unpredictable and predatory pricing.

Re:Regulated Taxis

[Luthair]

Roads are a scarce resource in large cities, we don't actually want a large number of taxis on the road. The part of the medallion system that is dumb is that it isn't tied to the driver.

Next step...

[MtHuurne]

...Uber starts paying its drivers what it thinks they're willing to accept.

Re:Next step...

[CanadianMacFan]

I think that they've been doing that for a while.

Better example:

[140Mandak262Jamuna]

Someone travelling from a poor neighborhood to a fast food joint when the work shift starts will be asked to pay more than someone going from movie theater to starbucks, because the former might not have any other transportation and can be squeezed dry.

excuse the sarcasm

[desdinova 216]

isn't the purpose of Taxi regulations is to make sure that the price is consistent regardless of time of day or distance? Oh wait, Uber thinks they're exempt from taxi regulations

Huh - this is different

[bjdevil66]

I honest didn't give a damn about all the weird stuff Uber and its CEO have been doing to various parties. All politics, embarrassments, etc. - don't care... As long as 1) the ride is cheaper, and 2) the drivers are good, that's fine.

This change, however, strikes a nerve for me personally. It's a combination of Big Brotherly data accumulation and usage against people, along with a heaping helping of, "Screw you, rich boy," shakedown.

If this is the way data collection is going, and how it'll be used, then THIS kind of abuse of people's wallets may finally be what wakes up the average Joe as to why privacy still matters.

Re:Tracks

[Anonymous Coward]

This!

When I Ubered from the Orlando, FL airport, the ride was wicked expensive because to service the airport, there were special requirements (black limo or upscale SUVs only) and the driver said they had to pay $1000 per year for the privilege of picking up fares there.

The return trip to the airport was half the cost, and that driver explained the strategy for my next trip. Get your airport ride to the nearest restaurant, and then call a normal Uber from there to wherever you are actually headed.

I thought that was a wonderful market response to Uber price gouging.

peace of mind

[Tom]

Back to the robber baron times.

People think they are smarter than their grandparents when actually they are so much more dumb that they don't even notice it.

You see, there is a reason for regulations, for fixed fares, for trade union wages and all that "evil government" stuff. The reason is called peace of mind.

Sure I can go through life negotiating every small deal, always checking all the prices, always on the edge making sure nobody takes advantages of me while I try to use every opportunity there is. What a stressful way to live your life!

When you travel the same way multiple times, you learn very fast how much the taxi rate is. If you travel in the same city a lot, you can quickly make reasonable estimates. Because of fixed prices. I can decide to take the taxi to the airport tomorrow, estimating what it will cost me and deciding the saved time is worth it. But when prices change all the time depending on a hundred variables half of which I don't even know, then there is no such calmness. I need to check all the different driving services and compare, and just before booking, not the evening before. Then I need to make sure none of the surge charging or other modifiers changes the price at the last minute.

Why should I fuck my brain like that to maybe save a few bucks? Why should the driver go to work in the morning with not the slightest clue how much he'll earn today? The slavery to market mechanics sucks the souls out of all the human beings involved in the transaction. You can do business like that when you have machine-to-machine trading, but us humans, for us all of this dealing is not an end in itself, it is just a tiny part of the life we live, and the mental burden, the uncertainty and unpleasant surprises have an effect far stronger than the monetary optimisation effect.

The "gig economy" is not a new invention. Millions of people throughout the ages lived their lives like that. Short, miserable and poor lives. Nobody ever became rich with gigs. It's just a trick to swindle us out of the health care, unemployment and other social security systems that older generations fought and died for to establish. Everyone pushing this misery ought to be ashamed and beg for forgiveness at the graves of their grand- and grand-grand-parents.