The Real Cost of Uber

Disclaimer:  I work for Flywheel, an Uber competitor.  The opinions expressed here are my own, and are not endorsed by Flywheel.

Valley Wag has a ridiculously over-the-top article accusing Uber of being Randian conspirators or something, which does contain one useful piece of information:  at some point and time last weekend, Uber surge pricing in the North East reached x7.75.

The gloss of that article is that this is the downfall of western civilization, which is ridiculous.  But it’s important to note a few things:

  1. If you go to some kind of event and your plan to get home is “take Uber,” you may find that when it comes time to get home, taking Uber could mean that your $30 trip instead costs $60, $90, or indeed $200 or more.  This is perhaps justified!  There was a snowstorm when the surge pricing reached those levels last weekend, and perhaps the sensible approach was just “stay where you are, regardless.”  But it’s a level of uncertainty about my travel costs that would make me nervous, and it’s not like surge pricing (at lower multipliers) is a rare event for Uber.
  2. I think that people typically think of Uber as “It costs X,” where X is their published (non-surge) price.  But that’s not at all their pricing.  Surge pricing comes in at high demand times, which are by definition the times when people are most interested in taking Uber.  If you routinely take a ride Wednesday afternoon, you’re unlikely to ever pay surge pricing (baring weird things like snowstorms).  But if you’re interested in getting a ride on Friday or Saturday nights — or indeed Friday mornings, and probably Thursday nights at least a lot of the time — then you’ll pay more than the listed rate.  A LOT more than the listed rate.  UberX in San Francisco has a listed rate that’s very competitive with taxis, but when you multiply it by x1.5 (which was last Thursday), it’s a ton more expensive than taxis.  If you multiply it by x2.0 or higher, like it was at times last weekend (with no inclement weather), then it’s princely compared to taxis.

As long as Uber remains one option of many, this is probably all to the good.  You can choose whether to take Uber and pay for an increased certainty of taking a ride, or to use another service, potentially have a harder time getting a ride (though it’s not clear to me how much harder), and pay amounts of money that are not absurd.


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