Uber Surge Pricing: How Does it Work and is it Cheaper to Wait for a Cab?
In recent weeks, anger has been reported in various news outlets about how Uber’s surge pricing in London is out of control. Most articles discussing the phenomenon have quoted Twitter threads, where unhappy consumers are highlighting the vast difference in prices thanks to surge charging. Some have even gone so far as to accuse Uber of raising their prices in the capital. In response to these claims, an Uber spokesperson issued the following statement:
“'Uber has not raised its prices in London since 2019 and is committed to providing safe and affordable trips.”
What is Surge Pricing?
Surge pricing is simply the act of adjusting prices based on peak times or an increase in demand for services. Despite being criticised for this practice, surge pricing is by no means unique to Uber. More commonly known as ‘dynamic pricing’, hotels, airlines, tickets for music or sporting events and even advertising are subject to changing rates depending on demand or around peak times.
From a business perspective, surge pricing is beneficial as it can help balance supply and demand during peak times. On top of this, it can offer businesses a chance to pay staff a higher rate of pay during busy periods, like bank holidays.
How does it work?
According to Uber’s website, surge pricing is introduced when there aren’t enough cars on the road to meet demand. This could be due to peak times, bad weather, or large events like football matches or festivals. Following the Euro 2020 finals, the price of an Uber was four times higher than the base rate. Uber state that the reason for the price increase is to ensure that those that need a ride, get one. Riders who don’t need a ride as desperately can choose to wait to see if prices go down.
Surge prices are calculated in different ways depending on where you are using the app. The additional costs can be calculated by ‘a multiplier to standard rates, an additional surge amount or an upfront fare estimate including the surge amount’. Surge pricing is also area-specific, and this is represented within the app by shaders ranging from light orange through to dark red. Dark red being the busiest area and orange the least.
What are people saying?
Despite Uber repeatedly stating that they have not increased their prices, customers are not convinced. Although previously enjoying a reputation as a cheap reliable ride, some consumers are now claiming that it’s cheaper to get a black cab in the capital. A video comparison from licensed London cabbie and YouTuber, Tom the Taxi Driver, revealed that for most journeys, the cost was comparable between an Uber and a cab.
Trade representatives have been quick to point out that London’s taxis have always been the better option. Speaking to the MailOnline, Steve McNamara, General Secretary of the Licensed Taxi Drivers' Association, said:
“Black cabs have always been the most efficient, reliable way to travel in London, offering a high quality, regulated service, at a fair price... Its previously low fares were only made possible by its exploitative practices.”
'Since the Supreme Court ruled that its drivers are ''workers'' and owed certain rights, including minimum wage, it's unsurprising that the company has increased fares to pass these costs onto passengers.”
This last point is definitely food for thought. Although Uber state they haven’t increased their prices, some feel that they are using surge pricing far more regularly than they have in previous years. This could be down to the fact that Uber now has an increased wage bill to contend with.
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