Here's How Uber Knows You Better Than You Do
Uber keeps on growing and growing, powered by the mystery of the surge.
Many an Uber user fears the surge, or “dynamic pricing” as the company calls it. This pricing mechanism sets the cost of the ride based on demand at the time. The surge has helped grow the company from belligerent upstart into one of the largest ride-booking services in the world.
But how does the company calculate when a ride should cost two, three, even nine-point-nine times as much as normal?
Uber's Head of Economic Research Keith Chen revealed that users are more likely to take a ride when it’s surging at 2.1 times than 2.0. Paying twice as much when it’s raining seems like Uber slapping on a higher price tag because they can, but paying 2.1 times as much makes us think a very complicated algorithm has calculated the ride’s exact worth.
Yes – we will pay more because human beings are completely irrational when it comes to money.
Chen says that Uber has also found that people are more likely to pay for the surge when their phone battery is running low. This makes sense – you want to lock in a ride quicker and if your phone dies you risk being stranded wihtout a cab. But how does Uber know how much battery you have left!? Apparently the app uses your battery information to know when to go into power-saving mode. Chen says they do not use this fact to set prices, but still, it is an awfully convenient thing for them to know.
All things considered, you are never made to pay for the surge. And the surge does mean that the service is always available as long as you’re willing to pay. Just don’t be that woman who paid $720 for an Uber from Sydney’s foreshore to Blacktown on New Year’s Eve – always check before accepting.