Is Uber “Surge Pricing” Unfairly Expensive?

Order the premium UberLUX service and you could be riding as a passenger in a luxury car similar to this one. Photograph courtesy of Uber. Click on the photograph above to access the official Internet web site of Uber.com.


I was watching the local television news in Atlanta — something I do not usually do — when a report caught my eye about a person who felt that he was “taken for a ride” by Uber on New Year’s Eve when he was charged “upwards of $200.00” for a ride which normally costs approximately $60.00.
Sure enough, a search on FlyerTalk revealed a discussion with a warning that prices to use Uber — a car service with a software application program for your personal electronic device where no cash is exchanged, as all transactions are completed electronically with your credit card already on file — would be markedly higher than usual on New Year’s Eve in New York in a practice known as surge pricing, where the rate of hiring a vehicle increases significantly during periods of absolute peak demand.
This leads to the question: is surge pricing by Uber unfairly expensive?
My opinion is that this is more of a case of caveat emptor and the classic law of supply and demand rather than consumer unfriendly practices. To me, it is obvious that Uber could not get away with charging surge pricing at peak times if customers did not pay for it…
…especially if those customers do not have to wait out in the rain for 45 minutes hailing a cab when all the customers have to do is summon a car operated by Uber on their personal electronic devices — and the nearest available driver will be dispatched to your current location in order to ensure the quickest response.
Also, surge pricing supposedly gets more vehicles on the road when demand outpaces the number of drivers, which ultimately increases the reliability of the service offered by Uber. Getting more vehicles on the road is not as easy for a typical taxi company or a car livery service.
There is a debate as to whether or not surge pricing should apply during and after an emergency — such as a natural disaster, for example. As long as the pricing is not considered gouging, Uber should be able the charge more to cover additional costs without taking advantage of people, in my opinion.
I rarely use taxi cabs and car services — but hailing a cab in New York can be quite difficult during times of rush hour and in inclement weather. However, cab fares typically remain constant regardless of the demand — although added travel time due to slow traffic can increase the overall taxi fare.
Uber offers a transportation experience where the expense is typically comparable — or even less than — the cost of a similar ride in a taxi cab in your choice of five different classes: from the least-expensive uberX to the pricey UberLUX. Many FlyerTalk members and fellow “bloggers” laud the praises of Uber, which seems to have successfully carved a niche in a market that would typically otherwise be difficult to crack.
I decided to look up the cost of Uber for transportation from where I am based to the international airport. For a fare of between $62.00 and $83.00 for the uberX service during a slow time — including gratuity — I would rather rent a car or use my own vehicle the majority of the time.
Of course, there are disadvantages to renting a car or using your own vehicle — such as worrying about traffic and other drivers while on the road, for example.
When you rent a car, you typically have to go to the location to pick up your vehicle. I know that Enterprise Rent-A-Car offers a service where they will come and “pick you up”, but my experience suggests that is not as convenient as that may seem. I plan to post an article about my experience with Enterprise Rent-A-Car in the near future — and why I do not intend to use their services again. You also have to consider your time in picking up and returning the vehicle — as well as the cost of fuel, taxes, fees, perhaps parking, and possibly insurance if you are not already covered.
Using your own vehicle means depreciation, parking — in terms of cost and finding a spot — and if there is a mechanical problem, it is your problem. I hope you are a member of an automobile club service in case of emergency.
On the other hand, if I plan to be away for three weeks and pay less than four dollars per day for parking near the airport, then the cost of the Uber service is more economical as well as convenient. I suppose the choice to use the service offered by Uber depends on a number of factors.
Still, using a rental car or your own vehicle can be significantly less expensive than the service offered by Uber — unless you are fortunate to be able to take advantage of specials offered by Uber, such as the following sampling of recent incentives to try Uber:
  • A free ride with Uber in the Seattle area worth up to $40.00 — compliments of Kenmore Air — good through January 31, 2014
  • Free rides with Uber offered by Alaska Airlines to Seattle-Tacoma International Airport worth up to $50.00 on December 23 and 24, 2013
  • Two free rides with Uber in Dubai — up to 75 United Arab Emirates Dirham each way — supposedly with no expiration date

 
I have yet to be a passenger in a vehicle operated by Uber — but rather than beware of its surge pricing, you should be aware of it, as Uber is quite transparent and proactive about letting its customers know when surge pricing is expected to occur.
Have you experienced Uber? If so, how was your experience? What are your thoughts pertaining to the practice of surge pricing? Please post in the Comments section below. Thank you.

5 thoughts on “Is Uber “Surge Pricing” Unfairly Expensive?”

  1. bruscol says:

    I have used Uber in NYC and it normally is much more expensive than a Yellow taxi, but not more expensive than calling a car service and getting a private car – which, in reality, is what you are getting with Uber, so to compare it to street hail taxis is not fair – even the worst Uber is better and more roomy than a Yellow taxi in NYC. But, when it rains or is at rush hour – and I am standing trying to hail a taxi for 20 minutes and have a meeting or dinner to get to – I would GLADLY pay Ubers surge pricing – to me, it is worth it – so why shouldn’t it be available to me? If you don’t like it or it is not worth it to you – don’t use it……very simple. The surge pricing, in NYC, definintely increases the supply – so it is worth it…

    1. Brian Cohen says:

      FlyerTalk members compare the service offered by Uber to taxis here, bruscol — and some say that in many instances, they prefer Uber over a typical taxi cab.
      As I said, “I suppose the choice to use the service offered by Uber depends on a number of factors.” In your case, the surge pricing is worth it to you — especially if you have an appointment such as a meeting or dinner and you want as little hassle as possible.
      Now, an unfair comparison might be comparing Uber to the New York City subway system — but then again, if I wanted to go across town in the vicinity of 42nd Street, I might be inclined to simply take the shuttle from Times Square to Grand Central Terminal. That mode of transportation can be fast and inexpensive at $2.50 per ride — but it also can be crowded and unpleasant. However, if I wanted to go from the Hudson River to the East River in that same vicinity, then the service offered by Uber may be in order…

  2. b-lab says:

    I recently used Uber-X in LA around New Year’s Eve for example. The ONLY issue I have with surge pricing is that I’m not sure if people are alerted if they don’t request a quote. As a cheapskate, I always request a quote before I request a car. If you don’t, you could end up with an unexpectedly large bill.
    On NYE in LA surge pricing was in effect and prices were 4x higher than usual around 1AM as bars were closing. A few hours later, back to normal. Again, I know this because I requested a quote.

  3. arlflyer says:

    Surge pricing factor shows up in a huge box when you go to request the car…you have to accept that you will pay the high price before the car is summoned. There is nothing really that I have seen that makes me think they are trying to pull a fast one. It is pretty clearly stated.

  4. diburning says:

    I haven’t actually taken a ride on Uber, and I’m already disappointed by this company.
    I was late for work and needed to hail a cab, but none were around, so I decided to give Uber a try. I saw that there was a car in the area who was about 8 minutes away. So, I decided to try it. I was watching the map and saw that the driver was actually heading away from me and the timer went from 8 minutes to 12 minutes to 20 minutes. So, I cancelled since I didn’t want to wait that long for a car that may or may not come pick me up. Luckily, I was not charged for cancelling because the car wasn’t within the threshold distance or time to getting to me, but that one incident effectively disqualified me for any and all promotions where I could get a free first ride or a discounted first ride. I contacted Uber to see if I could get that fixed, and no one got back to me or re-enabled my account to let me use a coupon or promo.
    I guess if Uber doesn’t want my business, I’ll have to give it to the cabbies.

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