Over the weekend, on-demand ride service Uber upset a lot of customers in New York with its “surge pricing.”
That’s because some customers ended up paying insanely high prices, seven to eight times the normal charges in certain places.
Surge pricing happens when there is a lot of demand, but not enough cars on the road. So Uber raises its fares to ensure it has reliable vehicles ready for those who actually need them.
Uber does this to incentivise more drivers to be out on the road, given that they would likely rather not be driving on the during a storm or on special occasions like New Years Eve.
The price continues to increase until there are enough drivers on the road. Once there are enough drivers to meet customer demand, Uber decreases the price. This practice is very similar to the way airlines and hotels “surge” their pricing to make sure there are always seats/rooms for those who need them.
Here’s how Uber CEO Travis Kalanick explained why the company uses surge pricing in a blog post shortly after New Year’s Eve this year:
Uber is ALWAYS a reliable ride. Being unavailable, inconvenient is the opposite of Uber.
This is a big part of why we do surge pricing. What good is it if we are as unavailable as a taxi system or an unreliable muni system on NYE? Being Uber means being “Always On” and “Always Convenient”.
So how can you avoid surge pricing?
For what it’s worth, Uber does notify you when surge pricing is in effect. In order to request a ride with , the user must confirm it. You can also use the fare estimator to get an estimate of your ride before you actually request it.