ubermap100225237orig500
Business Management

Uber's fare cuts won't cancel out surge pricing's bad press

Controversial transportation app Uber recently slashed the cost of its ride-sharing service UberX in 16 cities across the country in a move designed to convince users that it's not a price-gouging service only rich people can afford.

UberX is Uber's lower-priced alternative to its ritzier black car service. In recent months, the company has cut the base fares on UberX to make the app more competitive with cab companies and other ride-sharing services like Lyft and Sidecar. This latest round of cuts is by far the deepest, but it's also a temporary solution to reassure riders that Uber is an affordable alternative to traditional cabs after recent surge pricing solutions made headlines.

The company has long implemented surge pricing in an effort to get more drivers on the road during times of peak demand--like holidays and storms. But critics say the prices tend to surge far too high--sometimes up to seven times the normal price no matter how many drivers are around. Uber won't disclose how it calculates the surge multipliers, but has maintained the controversial policy even as it cuts prices in 16 of the 24 cities where UberX operates.

In San Francisco, UberX prices are now 33 percent less than taxi fares. In L.A., a ride from Beverly Hills to Santa Monica is $15.83 in an UberX compared to $26.80 in a cab.

Playing with prices

Uber is jonesing for new users and won't let a little surge pricing controversy slow it down. Normally when you refer a friend to Uber, both of you get $10. Uber has bumped that promotion up to $20 if used by Jan. 20, giving its existing users extra incentive to tell their friends about the app.

Like the $20 credit, the UberX price cuts appear to be temporary. According to a company email to drivers obtained by the San Francisco Chronicle, Uber will leave the lower prices in place for just a couple weeks as a "temporary test to try to drive more rides during a traditionally slow period."

But if Uber keeps playing with its prices, the reputation for reliability it has worked so hard to cultivate will all but disappear. Knowing you can get a car at any time is great, but not so much if you need a calculator to figure out how much the ride will cost you.

Uber may have bigger problems than pricing. French taxi drivers are striking for further government regulation of transportation apps, and on Monday Uber drivers in Paris were the targets of violent attacks. A recent presidential decree ruled that drivers for services like Uber, what France calls "chauffeur apps," must wait 15 minutes before responding to a customer request. But cab drivers are still fuming over the apps, and on Monday took to the streets to voice their anger. Uber and its ilk haven't been exactly popular with cab companies stateside, either, but at least drivers' tires aren't being sacrificed on the altar of industry.

PREVIOUS ARTICLE

« Why Google paid $3.2 billion for thermostat startup Nest

NEXT ARTICLE

So that Nokia Android phone may really be happening »
author_image
IDG News Service

The IDG News Service is the world's leading daily source of global IT news, commentary and editorial resources. The News Service distributes content to IDG's more than 300 IT publications in more than 60 countries.

  • Mail

Recommended for You

International Women's Day: We've come a long way, but there's still an awfully long way to go

Charlotte Trueman takes a diverse look at today’s tech landscape.

Trump's trade war and the FANG bubble: Good news for Latin America?

Lewis Page gets down to business across global tech

20 Red-Hot, Pre-IPO companies to watch in 2019 B2B tech - Part 1

Martin Veitch's inside track on today’s tech trends

Poll

Do you think your smartphone is making you a workaholic?