Blog Post

Uber admits to encouraging surge pricing, withholding drivers in San Diego

If you’ve taken Uber before, you know all about surge pricing: when cars in the area are limited, Uber can raise the fare price of the ride to astronomical levels. It’s a pain point for users that’s likely to become more painful now that a report from The Verge reveals the company purposefully kept drivers off the road in San Diego to encourage surge pricing and “to make earnings even higher” for drivers. Uber confirmed the message, saying the company wanted to “reward” its drivers with good paychecks. While those seem like good intentions, the fact that Uber is subjectively controlling its prices in some markets goes against the supply-and-demand pricing the company has touted in the past.

7 Responses to “Uber admits to encouraging surge pricing, withholding drivers in San Diego”

  1. Recently encountered 2X “Surge” pricing during a time of *low* demand in Washington DC. It was an early mid-week morning, well before rush hour. It appears to me that Uber was trying to increase the compensation for drivers who worked during a period where pickup requests were lower than normal.

    • Jonathan Cousar

      Angel, if it was a period of low demand, that means it was also a period of a small number of drivers available. Many drivers simply don’t go out when they know there will be low demand. So less demand = fewer drivers. Fewer drivers means that it’s easier from time to time for a slight surge in the number of passengers to outstrip driver availability. All it takes is for there to be slightly higher demand than usual and suddenly that handful of drivers are all taken and become unavailable.

      Just because it’s not rush hour doesn’t mean that demand won’t sometimes outstrip supply.

  2. I appreciate the reporting on this story. I don’t think companies that practice a “just because we can” attitude that creates unpleasant experiences for customers will fare well in the long term. They can surge all they want to but news travels fast and they will find themselves sitting idle. Rookie mistake. Uber needs to realize that the customer is the person who pays. Catering to the drivers is well intentioned but misguided.

  3. Last night in SF, a driver informed me that Uber’s service was offline for 30 minutes. When it came back online all the pent up demand caused surge pricing. He ended the trip early because it didn’t feel it was right for Uber to charge surge pricing because of their own technical issues.

    How many other stories like this are there? These kinds of stories are going to feed the regulatory wars.