Have You Been Surprised by Uber’s Surge Pricing Lately?
Many drivers noted that surge pricing has been at a high of around 4-5x the past few months, despite Uber not having a cap on surge pricing. This was largely driven by the massive signup bonuses Uber has and their recruiting practices to get as many drivers on the road to limit that surge pricing. I have seen some higher amounts in isolated cases but mostly maxes out at around 4-5x. Uber has been offering various incentives to get drivers out on the road to limit the surge pricing during busy times on Fridays and Saturdays, such as hourly guarantees. You can read more about it in this post about hourly guarantees.
However, the recent spike in activity for Halloween has pushed those surge pricing amount to very high amounts. Demand was so high that it caused outages on both Uber and Lyft:
- At 8:30pm EST Friday, Uber had a 30 minute worldwide outage. It seems drivers from London to California were affected with the rest of the world asleep.
- At 12am EST Friday night/Saturday morning, Lyft had a 2 hour nationwide outage. Lyft noted that it was caused by excessive demand.
I have seen some 8x pricing on Twitter and many Twitter Uber users have been tweeting their extremely high Uber bills, some over $500. A Denver Uber user Elliott Asbury got a 25 minute, 18 mile ride from Golden to Denver, but he paid $539 for the trip. In Asbury’s case, he was charged 7.4 times what his normal fare would’ve been: $72.85. (Read more at http://www.9news.com/story/news/local/2014/11/02/some-uber-rides-cost-hundreds-of-dollars/18360907/)
- Luckily, Uber said they will be refunding 25% of the ride if it was the user’s first Surge Pricing trip.
There are still some misconceptions about surge pricing, such as:
- Some passengers thought the entire ride is free for a new rider’s first trip, which is not true. It only covers the first $35 of your first ride. If its over that, you will need to pay for that with the registered credit card
Uber has been doing as much as it can to reduce the surge shock by:
- Having the surge amount in giant letters. If it is over a certain amount, passengers need to type in the amount of the surge multiplier
- Now Uber has a fare estimate feature right under the surge pricing amount so you can see what your fare is before you step in the car.
- You can split your fare with your friends, so you can reduce the cost of the trip.
- Surge Drop can let you know when the surge pricing has gone down so you can request a ride at a lower price at a later time (up to 30 minutes later)
Even with all of these measures in place, there are still many people this weekend that were surprised by the surge pricing. When I did a quick search for just “Uber” on Twitter on Saturday night, I was a bit shocked to find so many continuous negative tweets about surge pricing. I would say negative tweets outnumbered positive tweets about the service at least 5-1 and closer to about 10-1. I couldn’t find anything Sunday morning as many party goers are still recovering from the night out, but I wouldn’t be surprised to see more negative tweets trickle out during the day as more people wake up to their Uber bills.
Uber has been doing as much as it can to limit the surge pricing:
- Onboarding many new drivers everyday to meet demand
- Offering hourly guarantees over the Halloween weekend to get as many drivers out on the road.
- This mostly worked in established markets, such as Los Angeles, San Francisco and Boston where there are many drivers. In new markets like Denver, it may be more likely to get higher surge amounts due to less drivers and a less mature market. However, I do not argue that high surge prices can’t happen in established markets. There was one user in Seattle that paid $170 dollars for their trip home at a shocking 9.8x multiplier.
- Click here to read more about Uber’s Halloween Hourly Guarantee
- Click here to read more about Lyft’s Halloween Hourly Guarantee
How can you avoid Uber’s Surge Pricing?
You can use the competitior, Lyft. They have capped their Prime Time Tips (PTT) to 200%, which means you will only be paying a maximum of 3x (100% fare + 200% PTT) the normal fare. Keep in mind that Lyft has less drivers in many markets and you may not be able to get a ride when many other riders are requesting a ride. Rest assured at least your ride won’t be costing hundreds of dollars if you think you can wait for your ride home. [Lyft is always giving out credits towards your first ride. You can find the links above in the menu. Note that I also get ride credits when you take your first ride.]
How many Uber users have switched to Lyft to avoid the whole surge pricing issue? I have heard a few Lyft drivers noting that they got more Uber passenger over the weekend to avoid the surge pricing and they are well aware that Lyft caps theirs at 200% extra (or 3x the normal fare).Have more questions about Uber or Lyft? Head on over to our Rideshare Driver Training Course! Driver Promotions