Ridesharing service UberX has been a hit in Australia based on an assumption that it’s cheaper than catching a taxi.
However, in times of high demand – like the current Christmas and new year period, when many partygoers are looking to get across town – UberX applies surge pricing, which is a multiplier applied to the fare.
Uber’s public line has always been that this brings out more drivers in time of demand, but for the customer it simply means higher prices at peak times.
Different location, different results
Now new research published by comparison website Finder.com.au has worked out when Uber starts getting more expensive than taking a taxi for each of the five Australian mainland capital cities. And it’s surprising how fast this point can be reached in certain locations.
For Sydney, the surge price multiplier at which Uber costs as much as a taxi – a break-even point that Finder calls the “sweet spot” – is 1.3 during the day on a weekday. This means that if Uber applies surge pricing higher than 1.3, taxis are cheaper. Anything lower, then UberX wins out.
The comparison takes into account the credit card surcharge in taxis, which can be as high as 10% in Queensland. Uber does not apply a surcharge for credit cards.
Uber wins in Brisbane, but taxis take Adelaide
Because of this, Brisbane is the most competitive city for Uber, with a daytime weekday break-even point of 1.74. Taxis are the most competitive in Adelaide, with surge pricing of just 1.29 needed for a level playing field.
Uber becomes more competitive at night as most taxi companies apply a higher “evening rate” on the meter. At this time Melbourne becomes the best city for Uber, with a surge multiplier of 1.75 needed before taxis come into contention again. Adelaide still has the lowest threshold at night, with 1.48 as its break-even point.
All this talk of surge pricing doesn’t take into account availability of cars — which is perhaps a more pressing concern late at night after a Christmas party. If you can’t find a cab and need to get home, then paying a surge multiplier of 8 or 9 may be the only option – as it was the case for one Sydneysider that was hit with a $720 bill last year.
Uber has maintained that surge pricing is applied on a point-in-time, -location and -demand basis. However, Australian ridesharing rival GoCatch last week accused it of pre-planning surges in order to meet revenue promises to drivers.