Is Uber’s Surge-Pricing an Example of High-Tech Gouging?

[Nye Bevan]

At 10 p.m. on New Year’s Eve, I hailed a taxi outside my apartment in Adams Morgan and directed it to a friend’s apartment in Shaw, a nearby neighborhood, also in Northwest Washington. It took a mere minute to find an open car, and the traffic-clogged two-mile trip cost $13, including tip.

Three hours later, early in the morning on New Year’s Day, I figured that hailing a cab would be difficult if not impossible, and I requested a black car from the app-based service Uber. It took three minutes for a sleek sedan to arrive, and Uber let me know that I would be charged two and a half times its normal fare — part of its “surge pricing” strategy, implemented to help keep supply in line with demand, the company says. That ride home cost $47, no tip necessary.

The same service. The same amount of time. The same trip, if in reverse. And a price differential of three and a half times. That kind of arithmetic has, of late, enraged many of Uber’s users, who accuse the company of ripping off consumers when they need a ride the most: during holidays, deluges and snowstorms. The reaction from Uber has been equally strong. In short: Don’t want to pay the fare? Fantastic. Don’t use the service.

.....

That complaint got a formal response from Uber’s chief executive, Travis Kalanick. “Get some popcorn,” he advised readers on his Facebook page before publishing his own long retort. “We do not own cars nor do we employ drivers,” he wrote. “Higher prices are required in order to get cars on the road and keep them on the road during the busiest times. This maximizes the number of trips and minimizes the number of people stranded. The drivers have other options as well. In short, without Surge Pricing, there would be no car available at all.”

http://www.nytimes.com/2014/01/12/magazine/is-ubers-surge-pricing-an-example-of-high-tech-gouging.html?_r=0

As far as I am concerned, this makes perfect sense. Airlines and hotels charge vastly different prices for weekends, holidays, etc., so why shouldn't taxis?

[brooklynite]

1. Unless you object to workers making money, there's nothing to complain about...

Uber drivers are independent contractors; they're basically the same people driving for car services. The dynamic pricing model is designed to encourage more drivers to be available during high demand periods by increasing their earnings.

[Nye Bevan]

3. I agree. But now what if Uber ride prices were to dramatically increase in the wake of a hurricane,

earthquake, or other natural disaster? Which presumably would happen, since this is "demand-based" pricing. Would people then be squawking about "price gouging"?

[winstars]

2. In NYC historically on New Years Eve the cabs will charge double or triple the meter...

since there are literally thousands of people looking for a cab. Living in NY the vast majority of my life I always accepted this as part of New Years Eve; although there have been times when I (we) stayed home rather than deal with the madness. Are the uber drivers just doing the same thing???

Its totally against the law in NYC but this is and has been the reality I have observed since at least 1974.

Also, working in the entertainment industry, it has always been that if you worked somewhere on New Years Eve that you got double or triple your normal rate...