As expected by anyone keeping tabs on on-demand car service Uber, there were a ton of complaints on New Year’s Eve from customers caught by surprise by some hefty fares. In fact, if you look at Uber’s Twitter feed right now, it’s dominated by a series of apologies for the “sticker shock” it caused last night.
Meanwhile, several angry customers have been tweeting screenshots of their sky-high Uber fares. Some are as much as $US350 for just a few miles, which was almost enough to get you a booze-filled evening at the Applebee’s in Times Square.
Here are a few choice complaints. Warning — there’s some salty language:
And here’s a look at Uber’s apology-filled Twitter feed:
The reason why Uber cars were so expensive last night is because the company uses a tactic called “surge pricing” that increases the cost of taking a car. Uber surge pricing helps ensure cars are always available. It’s the same tactic airlines and hotels use when they raise prices during peak travel times.
The alternative to surge pricing, of course, is to keep all cars at the same standard fare. But if Uber does that, then there might not be any cars available for you to take at all. The company uses an algorithm that gauges demand versus available cars on the road to come up with how much the surge pricing should be at any given moment. The surge pricing also encourages Uber drivers to get on the road since they can make more money when surge pricing is in effect. Uber’s theory is that it’s better in the long run to be a reliable service with cars that are always available, even if that means its customers have to pay more.
To its credit, Uber has done a pretty good job at making sure its customers know when they’re about to be hit by a surge price. The Uber smartphone app won’t let you call a car unless you agree to the surge pricing first. It tells you exactly what multiple of the normal fare you will pay, plus what the minimum fare is. If the multiple is very high, the app will also require you to type it in to confirm you understand that you know you’re about to pay more than usual. (For example, last night I took an Uber and had to type in “2.75x” before I could hail my car.)
Uber also released a video and blog post this week explaining its surge pricing policy and that customers should expect higher fares on New Year’s Eve.
But despite all those efforts, it seems there was still plenty for Uber customers to complain about.