Private driver app Uber made headlines in December for their use of surge pricing.
Surge pricing is a method that hikes up the price of an Uber ride if the weather is bad or if the demand is high (like on New Year’s Eve).
It helps keep more Uber drivers available for pick ups, but it left the Internet buzzing with complaints.
Travis Kalanick, CEO of Uber, spoke with the Wall Street Journal in an interview and defended his company’s use of surge pricing:
WSJ: What do you say to customers who are unhappy about surge pricing?
Mr. Kalanick: We make sure people see it and understand it before they accept. If they accepted it and then they’re upset that they accepted it, I think that’s just people getting used to dynamic pricing in transportation.
If you’re going and buying a hotel room, you know that prices can change. You know that if you don’t buy it now, the price could go down or it could go up. You know that if you buy a flight on the day before Christmas, it’s probably 10 times more expensive than two weeks after Christmas. You’re OK with that and you understand it. But in ground transportation, there’s been fixed pricing for 100 years. Because of that, there’s an education process.
WSJ: As you add more of a supply of drivers, will there be less of a need for surge pricing?
Mr. Kalanick: To some degree. We can help smooth out the curves. But at the end of the day, Friday night is three or five times bigger than a Sunday night in any city around the world. And if you’ve got enough supply on the system so that we were perfectly supplied on a Friday night for as much demand as a city could ever throw at us, then the rest of the week you have drivers not making a living.
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