Uber's $357 Crosstown L.A. Ride Highlights Controversial 'Surge Pricing'
Uber is one of the hottest tech companies around right now. The app-based ride-sharing service has been valued at $3.4 billion or so, and its gross annual revenues alone are projected to be a whopping $1 billion a year.
See also: Ride-Sharing Apps Fight Back.
So why did it just charge a Los Angeles woman $357 for a 14-mile ride last Saturday night? The company calls it surge pricing:
Is this a story about a gangster named Serge who said, This is my pricing? No.
You see, the app everyone raves about for its (usual) cheaper-than-taxis fares has to adjust its prices during those prime times when everyone wants a car and its independent-contractor drivers are few and far between.
In snowy New York over the weekend the pricing scheme kicked in as people didn't want to walk and drivers were in low supply. Supply and demand.
But an Angeleno commenter (apparently this Twitter user) who goes by the initials E.C. told the website Valleywag that she experienced a super-surge of her own, right here in sunny Southern California.
It was Saturday night, and when the $357 charge came, including a $261.86 surge fee, she said was shocked. The L.A. rider alleges there was "no clear warning" that the bill of a lifetime would await the end of her ride:
It wasn't snowing; it wasn't raining; it wasn't New Year's Eve. It just happened to be 7pm -- not 9pm where most people are prime to go out nor 2 am when bars are closing. There was absolutely no excuse whatsoever to be charged the surge price -- not even their "supply and demand" cop-out justification, which falls short in this instance. On a clear night with near-perfect weather and at least 10 Uber vehicles within my proximity at the time of the reservation, there was plenty of "supply."
Uber disputes the claim that she wasn't warned that surge pricing was in effect. The company also says it did respond to her complaints, despite her claims to the contrary.
The rider's subsequent allegation that she was charged eight times was not true, the company says: Her card was rejected and she kept trying to get the amount approved. Ultimately it was -- once -- Uber officials say.
Uber sent us this statement:
This is the busiest time of year for Uber. Surge pricing helps get more cars on the road quickly when demand outstrips supply, helping to guarantee people can get a ride when and where they want. Users are notified of - and must acknowledge - the elevated pricing within the app before they can request a car. As soon as demand falls or supply increases sufficiently, prices return to normal.
CEO Travis Kalanick today responded to similar complaints.
He noted that Uber drivers are independents who work when they want to. He argued that without surge pricing it would be difficult to get these folks behind the wheel at times when everyone, including drivers, wants to go out and have fun. Especially during the holidays:
We regularly do surge pricing when demand outstrips supply. Remember, we do not own cars nor do we employ drivers. Higher prices are required in order to get cars on the road and keep them on the road during the busiest times. This maximizes the number of trips and minimizes the number of people stranded. The drivers have other options as well. In short, without Surge Pricing, there would be no car available at all.
Now granted, that the prices are significantly higher. BUT we notify every customer in big bold images in text, which each customer has to confirm in order to request. Furthermore, every customer also had to type in what the multiplier was in order to double confirm that they understood what they were agreeing to.