Apparently Uber has determined that plenty of potential customers won’t follow through and summon a ride when their app indicates that surge pricing is in effect in their area. So the ride-sharing giant is changing the way it displays fares.
The company is calling them “upfront fares,” which basically means that any surge multiplier will be factored into the estimated fare that the app displays.
Uber said it started testing this approach a couple of months ago with its UberX service in select cities, and now more will be on the way.
“Upfront fares are calculated using the expected time and distance of the trip and local traffic, as well as how many riders and nearby drivers are using Uber at that moment,” the company said. “And when fares go up due to increased demand, instead of surge lightning bolts and pop-up screens, riders are given the actual fare before they request their ride.”
This pricing model has been in use with the firm’s uberPOOL service when it launched two years ago. “Knowing how much a ride will cost in advance is clearly something riders appreciate,” Uber said. ”Today, uberPOOL accounts for over 20 percent of all rides globally.”
Uber’s surge pricing has been controversial from the start. A federal court is currently considering a lawsuit that challenges the model as illegal price-fixing. And researchers at Northeastern University who conducted a study of Uber’s proprietary surge pricing algorithm last year suggested ways to beat the higher fares.
And then there’s the whole issue around whether or not (or how) to tip your Uber (or Lyft) driver, an issue that has resulted in some of TravelSkills’ most well-read posts over the last few months.
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