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"This story makes it sound like Uber deliberately turned on surge pricing to capitalise on what was going on, which is not the case" Isn't that exactly what su

"This story makes it sound like Uber deliberately turned on surge pricing to capitalise on what was going on, which is not the case" Isn't that exactly what surge price is for on Ubers business side of view?

mseebach 12y ago
No, surge pricing is to get more drivers to go to the area with high demand to pick up the people who eagerly want to leave. The article didn't explore if it worked (as it probably should have, in the interest of honesty). It's very important to keep in mind that the alternative to surge pricing isn't cheaper cars, it no cars (or, more accurately, much too few cars). If there were plenty of cars available, the surge pricing wouldn't have kicked in.
- spacefight 12y ago
  "No, surge pricing is to get more drivers to go to the area with high demand to pick up the people who eagerly want to leave." That's what Uber claims all the time. Why does every one believe their very own narrative? Why isn't it enough to tell their drivers that there is business at location X and they'll show up? I mean, like it normally works too.
  - mseebach 12y ago
    Because Econ 101. The article mentions that at 4x surge pricing, the minimum cost was $100. That implies that normal minimum cost is $25. For $25, you can go several kilometers in a regular taxi[1] - ie, Uber, even at normal rates, represents a significant premium over regular taxis. If you're correct, that merely telling people that there's a spike in business somewhere means supply will flock to the demand, then it follows that there would be plenty of regular and much cheaper taxis for people to take. So, if you're correct, the only people who would take Ubers in the area are the people who love Uber so much that they will pay a premium of maybe $80 for the privilege of fleeing a scene of terrorism in an Uber rather than a taxi. Or, maybe you're wrong: Perhaps merely telling taxi drivers that there's business available is not in fact enough to get them to go take it. 1: http://www.taxifare.com.au/rates/australia/sydney/ http://www.taxifare.com.au/rates/australia/sydney/
    - spacefight 12y ago
      I simply refuse to believe, that the _only_ effective way to tell drivers of any service (Uber, Lyft, regular cabs) that there is a huge demand somewhere is to hike the price x times. Of course I might be wrong - I haven't tried to run a cab service ever. Edit: Or asked differently - why is surge pricing 4x or sometimes even 5x? Why isn't it like 1.10x? My guess it's profits 101.
      - dllthomas 12y ago
        I've definitely heard rumours of drivers that drive only during surge periods. No idea as to the veracity, but clearly the higher you hike the price the more people will find driving worthwhile.
        mseebach 12y ago
        I suspect that's unlikely. The drivers I've talked to (London) say that surges are short and geographically isolated: They're only worth it if you're already on the road and fairly close to the affected area.
        dllthomas 12y ago
        Good point. On reflection, I suspect the context was predictable surges (New Years Eve, &c).
      - mseebach 12y ago
        Well, now you're moving the goal-posts. Nobody insists that this is the only way. But it's a way, and it appears to work well - and it's perfectly consistent with one of the most basic and uncontroversial tenets of economics. It's obvious that Uber is an experiment on many levels. Their approach to public policy and regulation is one, another is whether users will accept a priority of better availability over uncertainty of prices (and so the risk of feeling fleeced), rather that the "old style" total certainty of prices over uncertainty of availability.
    - nerfhammer 12y ago
- chris_wot 12y ago
  In the Sydney CBD, that's very, very difficult to do. It takes quite a lot of time to get in there due to traffic, and all they are doing is increasing gridlock.

mseebach 12y ago

No, surge pricing is to get more drivers to go to the area with high demand to pick up the people who eagerly want to leave. The article didn't explore if it worked (as it probably should have, in the interest of honesty). It's very important to keep in mind that the alternative to surge pricing isn't cheaper cars, it no cars (or, more accurately, much too few cars). If there were plenty of cars available, the surge pricing wouldn't have kicked in.

spacefight 12y ago
"No, surge pricing is to get more drivers to go to the area with high demand to pick up the people who eagerly want to leave." That's what Uber claims all the time. Why does every one believe their very own narrative? Why isn't it enough to tell their drivers that there is business at location X and they'll show up? I mean, like it normally works too.
- mseebach 12y ago
  Because Econ 101. The article mentions that at 4x surge pricing, the minimum cost was $100. That implies that normal minimum cost is $25. For $25, you can go several kilometers in a regular taxi[1] - ie, Uber, even at normal rates, represents a significant premium over regular taxis. If you're correct, that merely telling people that there's a spike in business somewhere means supply will flock to the demand, then it follows that there would be plenty of regular and much cheaper taxis for people to take. So, if you're correct, the only people who would take Ubers in the area are the people who love Uber so much that they will pay a premium of maybe $80 for the privilege of fleeing a scene of terrorism in an Uber rather than a taxi. Or, maybe you're wrong: Perhaps merely telling taxi drivers that there's business available is not in fact enough to get them to go take it. 1: http://www.taxifare.com.au/rates/australia/sydney/ http://www.taxifare.com.au/rates/australia/sydney/
  - spacefight 12y ago
    I simply refuse to believe, that the _only_ effective way to tell drivers of any service (Uber, Lyft, regular cabs) that there is a huge demand somewhere is to hike the price x times. Of course I might be wrong - I haven't tried to run a cab service ever. Edit: Or asked differently - why is surge pricing 4x or sometimes even 5x? Why isn't it like 1.10x? My guess it's profits 101.
    - dllthomas 12y ago
      I've definitely heard rumours of drivers that drive only during surge periods. No idea as to the veracity, but clearly the higher you hike the price the more people will find driving worthwhile.
      - mseebach 12y ago
        I suspect that's unlikely. The drivers I've talked to (London) say that surges are short and geographically isolated: They're only worth it if you're already on the road and fairly close to the affected area.
        dllthomas 12y ago
        Good point. On reflection, I suspect the context was predictable surges (New Years Eve, &c).
    - mseebach 12y ago
      Well, now you're moving the goal-posts. Nobody insists that this is the only way. But it's a way, and it appears to work well - and it's perfectly consistent with one of the most basic and uncontroversial tenets of economics. It's obvious that Uber is an experiment on many levels. Their approach to public policy and regulation is one, another is whether users will accept a priority of better availability over uncertainty of prices (and so the risk of feeling fleeced), rather that the "old style" total certainty of prices over uncertainty of availability.
  - nerfhammer 12y ago
chris_wot 12y ago
In the Sydney CBD, that's very, very difficult to do. It takes quite a lot of time to get in there due to traffic, and all they are doing is increasing gridlock.