UberX Series: Zone Based Surge Pricing Strategy for Customers and Drivers
- Uber Registration
- Uber iPhone Driver App
- Uber Dashboard, Weekly Summaries, and Payment
- Uber Zone Based Surge Pricing Strategy for Customers and Drivers
- Uber Driver Risk and Costs
- Uber Driver Salary and Tax Rates
Uber Zone Based Surge Pricing Strategy for Customers and Drivers
I have covered this topic before but I wanted to add in some insight on how to maximize your fares as a driver and minimize your fares as a customer.
The Uber surge pricing is now zone based. It has its pros and cons. Here they are for the customer and driver:
- If you live far outside of the hotspots in the city, you are less likely to be under surge pricing. Sometimes you may never be under surge pricing as you live so far away from the city. It doesn’t matter if you are going into the city, it only matters where you are picked up.
- If you live in the hot spot, you are much more likely to have surge pricing. During a normal weekday night before zone based surge pricing, I have never seen surge pricing after 7pm except for Friday nights. Now, surge pricing is in effect for the downtown area, and South End most of any weeknight. In addition, zone based surge pricing is causing the surge to be higher for hot spots. I normally see 2 or 2.25x surge in the morning. Now, 3x is common during the mornings in the zones closest to downtown.
- Surge pricing is much more volatile now because the zone based demand is much smaller than the citywide demand. It can be good in that if you wait for a few minutes, it may go down by a lot. However, if you really need a ride that instant, your fare may be very high.
- If you are normally in the hotspots, you can get much higher fares. Because of the volatility, there is a chance you can get a huge fare that pretty much makes your day.
- The downside of the surge pricing is that some zones may not be in surge and you can get a non-surge priced request, even though you are in the middle of a surge zone. This means that not only you lose out on a higher fare but you have to drive further for it. It’s a lose-lose situation. This is the most frustration aspect of zone based surge from a drivers perspective.
- Because of the volatility of surge pricing, it can go away in a moments notice. I have seen 2x surge disappear within a few minutes as demand dies down.
Strategies to minimize your fare as a customer
- If you can, wait a few minute and see if the surge dies down. The app only shows you base fares, and other costs. Everything goes up together. Just remember the base fares without surge and you can quickly estimate what the surge multiplier is.
- If you are close to another zone, try to request a ride from another zone and see if the cost goes down. I would recommend just walking down to another zone to save some money. However, if you are using uber, you probably don’t care that much about cost. An unethical way to save money is request from a nearby non-surge or lower surge location and then call the driver to clarify that you are in a nearby place. You may get a cancellation from the driver if he knows what you are up to.
- Sometimes surge pricing can be time based, mostly based on other people’s activities. In Boston, last call at most bars is 1am. I know surge pricing is crazy between 1 and 2am. If you can hold out until 2am, then you can get a fare that is not under surge pricing. Same thing with after work commute. Most people get out around 5pm. If you wait a while (about 7 or 8pm), you can get a non-surge fare. You can try to leave early before the surge pricing starts.
Strategies to maximize your fares as a driver
- The biggest hurdle you need to overcome is to prevent requests from outside the surge zone. One way is to be right in the middle of a surge zone or be close enough to where you think the requests from the surge zone is coming from. I haven’t found a better way yet but this has yielded fairly good results. It’s just really the luck of the draw.
- Another way to ensure surge requests is to make sure there are other drivers around you. You will need to use your uber client app on your own phone to see where other drivers are. If you stay in the middle of all those other drivers, you can almost guarantee that you won’t get a request outside the surge zone as they will be more likely to get requested.
- Think about rejecting fares from non-surge zones or from long ETA requests. You don’t need to accept every request. You can drop a few here and there but try not to make a habit of it. Uber tracks this statistic and may deactivate you if you have a very low acceptance rate (say <50%)
- Use the client app to check what the surge rate is in each zone. Sometimes different zones surge at different rates. You can use this research to position yourself so that you can ensure the highest fare and also ensure you get a surge fare. Be smart about it. I usually take any surge fare I can get. One bird in hand is better than two in the bush. A note of caution on this tactic: because of the volatile nature of zone based surge pricing, by the time you get to a high surge zone, the surge may be gone by the time you get there. To make matters worst, the zone you came from may be under surge now that you left, not that you leaving has any effect on it. Think about this before re-positioning just for the surge pricing.