Main content

Uber price gouging? Get real

Den Howlett Profile picture for user gonzodaddy December 15, 2013
Tech driven Uber cab service got accused of price gouging. True or false? Welcome to the real world where supply and demand work to set prices.

Over the weekend, page view whore titles like Business Insider reported that Uber was price gouging its customers. Wrong. Here is what they had to say:

Saturday evening, while sleet and snow pounded the East Coast, Uber's surge pricing kicked into effect. The prices were unusually high — seven to eight times normal charges in some places — and people took to Twitter to scream.

Sounds like a headline made in heaven. They went on to mine the Twitterverse in support of their argument. At the end of this headline grabbing piece, BI says:

"By *raising* the price you *increase* the number of cars on the road and maximize the number of safe convenient rides. Nobody is required to take an Uber, but having a reliable option is what we’re shooting for," Kalanick wrote in January 2012. He points out this pricing structure is something all sorts of businesses do to manage spikes in demand, from hotels to airlines to car rental services.

Let's take a reality check. As I understand the way Uber works, you get a quote in advance of taking the ride - which by the way  is likely to be far better than the shit tip cabs operating in many US cities - so you have the choice. Pick up or shut up?

As my good buddy Frank Scavo pointed out, this is economics 101. As he correctly said:

Let's think about a few other examples that might have missed the attention of the cheap seat criticerati: A room at the Westin during Dreamforce cost $309/night plus tax, Today? $159. Go check short notice flights on your fave airline site. Better still, check the cost of the same property in a swish area rather than the slums next door.

Uber is disrupting the incumbancy among legislated city controlled taxi services. It offers a viable alternative that promises a better experience than the usual fare (sic.) Whether you chose to use Uber or not is entirely your choice as the paying customer.

Having hung around in San Francisco in the vain hope of finding a cab I want to get into, Uber offers an attractive, if expensive alternative. Given what I know about getting around the Bay Area, I'd happily pay the price. Does that apply in every city? No way. In London for example, I'd much rather take a 'black cab' where the chances of the driver knowing where I am going are far higher than the dopey 'hire cars.'

If conditions are such that supply is limited (Uber drivers are all self employed and decide when they wish to work) then market dynamics dictate that prices will rise/fall based upon who is available. Uber is transparent about surge pricing. How many others offer that same service transparency?

The bottom line? As I said to some who moaned about this on Twitter: STFU. If you know in advance what you're expected to pay then you have a choice. As someone who constantly wrestles humping piles of kit around in areas where I could use public transport I have to say I'd much prefer a friendly service for which I will happily pay a premium. Given the reluctance of many cabbies to hump anything other than a carry on you have to elevate the value of a friendly, inclusive service.

Everyone has choice but before moaning about Uber cost please realize - this is economics 101. If you don't like it then walk away rather than take a ride and then bitch and moan. That kind of behavior makes you look like a Moaning Minny.

A grey colored placeholder image