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Uber’s “Price Gouging” Is the Future of Business

8 points by johnpark 13y ago

brodney 13y ago
It is also the past, for several hundred years now.
vannevar 13y ago
No, it's not. There is nothing new or innovative about Uber's business model. Nothing. It is a gypsy taxi service, and gypsy taxis have existed for as long as taxis have existed. Licensed taxi fares are uniform for very good reason: predictability and fairness. In the long run, no one wants to risk being stranded in a snowstorm just so they can pay less on a sunnier day. And in many urban environments, taxis are an integral part of the public transportation system, even though they are privately operated. In that context, it's unfair to permit the wealthy to co-opt that infrastructure for their exclusive use, simply because they can outbid their poorer neighbors.
- aianus 13y ago
  If the price is artificially low taxi drivers will just stay home rather than go out and make the same amount of money as any other day while fighting traffic and dangerous road conditions. Furthermore, getting a taxi will degenerate into a lottery of being in the right place at the right time instead of going to the highest bidder (which is much more fair and forces people to re-evaluate if they really need a taxi or if maybe they could walk)
  - wwweston 13y ago
    > make the same amount of money as any other day while fighting traffic and dangerous road conditions. Isn't traffic already built into the metering model, as well as delays from dangerous road conditions? And presumably, insurance prices in risk...
    - aianus 13y ago
      Given how I see taxi drivers drive, I presume the per-minute rate doesn't make up for the lost fares. I can't say I know anything about taxi insurance, but surely an accident would be a huge hassle and make the driver look bad to his company or increase his premiums? During the taxi shortage caused by Hurricane Sandy, Uber (admittedly not the most unbiased party) claimed that doubling fares tripled the number of their drivers on the road. I don't find this implausible.
  - vannevar 13y ago
    a lottery of being in the right place at the right time instead of going to the highest bidder (which is much more fair...) A lottery where everyone has an equal chance of winning is by definition fairer than a system where 98% cannot participate because they cannot afford to.
    - aianus 13y ago
      The prices are not so high that they're unaffordable in an emergency. If it's not an emergency, then we should ration it the same way we ration any other non-essential consumer good when demand exceeds supply: by raising the price.
      - vannevar 13y ago
        I think it depends on how essential one regards the service, and on your income-dependent definition of 'unaffordable'. In bad conditions, taxi service might be considered more essential to many than it is during normal times. And I think 'eight times its normal rate' qualifies as unaffordable for most.
        aianus 13y ago
        Unless you're dying or giving birth, I don't see how a limo ride is an essential service. Even at 8x surge pricing (maybe $500 for a ride across Manhattan), Uber is much cheaper than an ambulance. Why are people mad at Uber and not the ambulance companies that charge insane prices for an essential service where they enjoy a monopoly?
        vannevar 13y ago
        We're not necessarily talking about emergencies, we're just talking about ordinary life. Like someone who needs to get to his kid's birthday party, or home in time to get a decent night's sleep before work the next day. And I think people are mad at ambulance companies, which is why the country is grappling with health care reform. A major obstacle to reform is the opposition of free-market idealogues who feel medical care should go to the highest bidder.
- toomuchtodo 13y ago
  If you're looking for a fixed fare/cost predictability with regards to transportation, there is always the bus or subway. This is market forces at work.
  - cstrat 13y ago
    Not every city has adequate bus & subway infrastructure, sometimes taxi is the only form of transport other than private cars.
  - vannevar 13y ago
    Child labor and police bribery are also "market forces at work". Over the course of history we've learned that unfettered market forces can be destructive, and in order to maintain a civil society we regulate them. The modern taxi system comes from that experience. It may not be perfect, but clearly neither is the alternative if that alternative is the kind of opportunism advocated by Uber.
    - toomuchtodo 13y ago
      > Child labor and police bribery are also "market forces at work". You should be ashamed of yourself for comparing demand pricing for private transport to child labor and police bribery. > Over the course of history we've learned that unfettered market forces can be destructive, and in order to maintain a civil society we regulate them. Cheap, reliable, private transportation is not a right. Civil society is entitled to efficient, fairly priced mass transportation, not price controls for private transport. > It may not be perfect, but clearly neither is the alternative if that alternative is the kind of opportunism advocated by Uber. So don't user Uber then. Use a regular taxi (while they're still around). Walk. Own a bicycle or a membership to a bike share program. Or take mass transit. End the entitlement complex.
      - vannevar 13y ago
        You should be ashamed of yourself... And you should be ashamed of yourself for either missing my point or choosing mock outrage instead of thoughtful response. Cheap, reliable, private transportation is not a right. Neither is the operation of a gypsy taxi fleet. Use a regular taxi (while they're still around). And this is the crux of the issue. Both Uber and the taxi service use the same public infrastructure to operate. Streets, police, road repair, snow removal, the list goes on. Like it or not, Uber is inextricably bound up in public infrastructure and in an urban setting it is part of the public transportation system. If it cannibalizes the licensed taxi system to the point of extinction, then it will have effectively co-opted the system for the affluent, just as I said. End the entitlement complex. Let's start with the sense of entitlement that leads corporations like Uber to feel they have no social obligation, even though their shareholders and officers are relieved of personal liability for their actions as part of their (government-issued) corporate charter.
- gensym 13y ago
  If you think the current licensed taxi fare structure is fare, then you must have spent your entire life in wealthy neighborhoods, or you would know how difficult it is to get any taxi outside of those neighborhoods. The wealthy have already co-opted the "infrastructure" that is taxis, at least in Chicago and New York.
  - vannevar 13y ago
    This is true, but making service unaffordable to even the middle class during peak time is not the solution.
jgalt212 13y ago
Is it just me, or does it seem apocryphal that it requires an 8X revenue jump to get drivers to drive in the snow? To me it seems the market clearing surge ratio during a snowstorm is around 3X. So is Uber being straightforward in saying they are just taking their usual small cut (surge or no surge), or are they taking their small cut and the distance between 3X and 8X as well?
davidgerard 13y ago
Why price gouging is rare, even though economists, libertarians and other sociopaths love it: http://www.npr.org/blogs/money/2012/10/29/163861383/why-economists-love-price-gouging-and-why-its-so-rare http://www.npr.org/blogs/money/2012/10/29/163861383/why-econ... tl;dr normal people with functioning empathy consider it grossly antisocial and won't put up with that shit. If Uber wants itself regulated to hell, then the CEO just needs to carry on in this style.

8 points by johnpark 13y ago

It is also the past, for several hundred years now.

No, it's not. There is nothing new or innovative about Uber's business model. Nothing. It is a gypsy taxi service, and gypsy taxis have existed for as long as taxis have existed. Licensed taxi fares are uniform for very good reason: predictability and fairness. In the long run, no one wants to risk being stranded in a snowstorm just so they can pay less on a sunnier day. And in many urban environments, taxis are an integral part of the public transportation system, even though they are privately operated. In that context, it's unfair to permit the wealthy to co-opt that infrastructure for their exclusive use, simply because they can outbid their poorer neighbors.

aianus 13y ago
If the price is artificially low taxi drivers will just stay home rather than go out and make the same amount of money as any other day while fighting traffic and dangerous road conditions. Furthermore, getting a taxi will degenerate into a lottery of being in the right place at the right time instead of going to the highest bidder (which is much more fair and forces people to re-evaluate if they really need a taxi or if maybe they could walk)
- wwweston 13y ago
  > make the same amount of money as any other day while fighting traffic and dangerous road conditions. Isn't traffic already built into the metering model, as well as delays from dangerous road conditions? And presumably, insurance prices in risk...
  - aianus 13y ago
    Given how I see taxi drivers drive, I presume the per-minute rate doesn't make up for the lost fares. I can't say I know anything about taxi insurance, but surely an accident would be a huge hassle and make the driver look bad to his company or increase his premiums? During the taxi shortage caused by Hurricane Sandy, Uber (admittedly not the most unbiased party) claimed that doubling fares tripled the number of their drivers on the road. I don't find this implausible.
- vannevar 13y ago
  a lottery of being in the right place at the right time instead of going to the highest bidder (which is much more fair...) A lottery where everyone has an equal chance of winning is by definition fairer than a system where 98% cannot participate because they cannot afford to.
  - aianus 13y ago
    The prices are not so high that they're unaffordable in an emergency. If it's not an emergency, then we should ration it the same way we ration any other non-essential consumer good when demand exceeds supply: by raising the price.
    - vannevar 13y ago
      I think it depends on how essential one regards the service, and on your income-dependent definition of 'unaffordable'. In bad conditions, taxi service might be considered more essential to many than it is during normal times. And I think 'eight times its normal rate' qualifies as unaffordable for most.
      - aianus 13y ago
        Unless you're dying or giving birth, I don't see how a limo ride is an essential service. Even at 8x surge pricing (maybe $500 for a ride across Manhattan), Uber is much cheaper than an ambulance. Why are people mad at Uber and not the ambulance companies that charge insane prices for an essential service where they enjoy a monopoly?
        vannevar 13y ago
        We're not necessarily talking about emergencies, we're just talking about ordinary life. Like someone who needs to get to his kid's birthday party, or home in time to get a decent night's sleep before work the next day. And I think people are mad at ambulance companies, which is why the country is grappling with health care reform. A major obstacle to reform is the opposition of free-market idealogues who feel medical care should go to the highest bidder.
toomuchtodo 13y ago
If you're looking for a fixed fare/cost predictability with regards to transportation, there is always the bus or subway. This is market forces at work.
- cstrat 13y ago
  Not every city has adequate bus & subway infrastructure, sometimes taxi is the only form of transport other than private cars.
- vannevar 13y ago
  Child labor and police bribery are also "market forces at work". Over the course of history we've learned that unfettered market forces can be destructive, and in order to maintain a civil society we regulate them. The modern taxi system comes from that experience. It may not be perfect, but clearly neither is the alternative if that alternative is the kind of opportunism advocated by Uber.
  - toomuchtodo 13y ago
    > Child labor and police bribery are also "market forces at work". You should be ashamed of yourself for comparing demand pricing for private transport to child labor and police bribery. > Over the course of history we've learned that unfettered market forces can be destructive, and in order to maintain a civil society we regulate them. Cheap, reliable, private transportation is not a right. Civil society is entitled to efficient, fairly priced mass transportation, not price controls for private transport. > It may not be perfect, but clearly neither is the alternative if that alternative is the kind of opportunism advocated by Uber. So don't user Uber then. Use a regular taxi (while they're still around). Walk. Own a bicycle or a membership to a bike share program. Or take mass transit. End the entitlement complex.
    - vannevar 13y ago
      You should be ashamed of yourself... And you should be ashamed of yourself for either missing my point or choosing mock outrage instead of thoughtful response. Cheap, reliable, private transportation is not a right. Neither is the operation of a gypsy taxi fleet. Use a regular taxi (while they're still around). And this is the crux of the issue. Both Uber and the taxi service use the same public infrastructure to operate. Streets, police, road repair, snow removal, the list goes on. Like it or not, Uber is inextricably bound up in public infrastructure and in an urban setting it is part of the public transportation system. If it cannibalizes the licensed taxi system to the point of extinction, then it will have effectively co-opted the system for the affluent, just as I said. End the entitlement complex. Let's start with the sense of entitlement that leads corporations like Uber to feel they have no social obligation, even though their shareholders and officers are relieved of personal liability for their actions as part of their (government-issued) corporate charter.
gensym 13y ago
If you think the current licensed taxi fare structure is fare, then you must have spent your entire life in wealthy neighborhoods, or you would know how difficult it is to get any taxi outside of those neighborhoods. The wealthy have already co-opted the "infrastructure" that is taxis, at least in Chicago and New York.
- vannevar 13y ago
  This is true, but making service unaffordable to even the middle class during peak time is not the solution.

jgalt212 13y ago

Is it just me, or does it seem apocryphal that it requires an 8X revenue jump to get drivers to drive in the snow? To me it seems the market clearing surge ratio during a snowstorm is around 3X. So is Uber being straightforward in saying they are just taking their usual small cut (surge or no surge), or are they taking their small cut and the distance between 3X and 8X as well?

davidgerard 13y ago

Why price gouging is rare, even though economists, libertarians and other sociopaths love it: http://www.npr.org/blogs/money/2012/10/29/163861383/why-economists-love-price-gouging-and-why-its-so-rare http://www.npr.org/blogs/money/2012/10/29/163861383/why-econ... tl;dr normal people with functioning empathy consider it grossly antisocial and won't put up with that shit. If Uber wants itself regulated to hell, then the CEO just needs to carry on in this style.