The cost of Ubers and unregulated market will fall as more supply comes on tap -- both via Uber and via 3rd parties.
In two years time Uber and everyone else will have a public API to communicate their permanent variable pricing, and they'll be a ton of smartphone apps that talk to all of the APIs from all of the providers and suggest which one to take based on the current supply/demand curve and other factors.
The article suggests that Uber subsidize the price on NYE. Given that the price is set by demand, that doesn't make any sense. However much Uber or Amex subsidizes the price, there are still X people that want rides and Y < X rides available, and the amount you the rider have to pay to win the auction is the same.
The anger came because Uber didn't do a good job of setting expectations. Their customers expected that they could get a ride anytime, even NYE, if they were willing to pay a certain premium over what a cab would cost. But the premium on NYE was much larger than the customers (rightly or not) expected. If Uber had done a better job of managing expectations, they wouldn't have angry customers.
This is similar to what they did on halloween. I wouldn't go so far as to say they were taking advantage of their customers, but one would think that UberCab users would only be willing to pay up to x20 the rate of a yellowcab when they're intoxicated in the middle of the night New Years Eve. Kind of like when you pay $15 for a beer at that hip after hours bar. If you're potential customers weren't drunk people out partying, it'd seem like an absurd pricing mechanism.
Uber should consider implementing an app feature where I can enter my destination address and it calculates the price of that route AT THAT moment: "If you were to book a car now it would be $X" not just "hey its 6.25x". The UI is terrible. People dont know what 6.25x means. Give it to them in dollars.
This feature alone would have solved this NYE public relations drama.
I use Uber from time to time and enjoy it immensely. I agree with several of the article's things Uber could have done better, but so much of the whole outcry is people not wanting to take responsibility for their own actions.
It sounds like this is too extreme to apply a blanket label of "responsibility for their own actions". People have certain reasonable expectations of what something will cost, especially when it's a service they use habitually. If you suddenly change that cost by a factor of 4 or more, you can't reasonably expect people to spot that and change their behavior accordingly unless you make it extremely obvious. It doesn't sound like Uber made the surcharge as visible as the size would require.
I imagine this will attract some replies which say that it's still their fault no matter how unreasonable one might consider the price change to be. If you're planning to write one, then before you do, please consider this question: do you study a taxi's rates from top to bottom before accepting the ride every time you take a taxi?
I agree that blame isn't all on the user... but most articles seem to be very one directional.
Even the person in the article mentions seeing the warning but quickly dismissing it. Think how often you see an alert pop up and dismiss it without really reading it.
I think even if Uber did a better job of notifying people, you'd still see an outcry.
That you'd still see an outcry is an indication, I think, that you need to do even more to notify people. If you're going to charge 4-5x your normal rate, you need to make sure people know it before they accept it. Have the driver tell them, "We're currently charging 4x our normal rate, just so you know." Make the app pop it a sample fare in big numbers. Do something to make it absolutely blindingly obvious, not an alert that you can dismiss without really reading.
If there's no reasonable way to accomplish that, then perhaps that's a sign that the surcharge is inherently unreasonable.
Even if everybody was completely aware of what they were getting into, there would probably still be an outcry. But it would be a completely different outcry, along the lines of "you're charging too much and taking advantage of people" instead of "you completely ripped me off".
This is just yet another example of why taxis should be deregulated.
The reason Uber is as expensive as it is is that it there are too few cars. On New Years eve more people want to take a cap but there is no way to increase supply, because there are too few medallions.
There are not enough roads in the city on NYE for everyone who'd want a private car. More medallions are not going to solve this class of "spiky demand" problems.
In Brisbane city on NYE, the public bus service was free after 9pm. There were a lot of road closures and people who wanted to travel to the city used public transport. I had my first bus trip of 2011 on NYE, and it was quick, because there weren't many cars on the road.
Isn't the whole point of Uber that by requiring you to book a ride using their app, they're not classified as taxis and therefore sidestep all of the associated regulation?
Interesting, it seems that the relevant regulations are wonderfully complex. Are such cars still limited in number? I tried to dive into the NYC taxi commission to see, but got lost pretty quickly....
I can also read this article as a reason why Uber should be regulated more like cabs so folks don't get stuck with a $67 dollar cab ride for going less then a mile.
In fact in Uber's unregulated market there were still too few cars on the road and it lead to artificially high prices it seems like this article is arguing for regulation.
You could argue that Uber didn't make it obvious what the price would be, which might make them liable.
But in general these people didn't pay to drive a mile but to drive a mile on the busiest day of the year. That costs.
The alternative -- and the reason people didn't use regular cabs -- is that there aren't enough of them. So either you get shortages or you get higher prices (which are good, since they incentivice those who don't value the transportation as much to walk).
I have used it in Seattle, for business and personal.
Honestly, the reasons I'm happy to pay a premium are the phone app and the reliability: I'm fed up of booking a cab that turns up 30+ minutes late.
If any of the three/four big taxi firms in Seattle put together an app like Uber's (basically with the 'pick me up from this spot ASAP and keep me up to date with how far away you are' feature) - they would be my go-to ride every time, and would be incredibly popular.
Have never taken a cab in SF; the crazy shortage of medallions in the city sounds almost criminal.
Well, yes that is why I use Uber - I was banned from the Yellow and Royal because they would NEVER show up, and I would call multiple taxi co's because I couldnt rely on anyone to come.
I live in an area that is really hard to get a taxi (Twin Peaks) and I used to live in the Presidio where it was simply impossible.
I love the service Uber provides, I just think that the whole taxi system is over priced by about double.
Time is money. It costs me $2 to take the bus to bart, then $15 for a round trip bart ticket... but bart to SFO doesnt run until after 8AM on sundays and my flights are typically 7:35AM.
(I fly to Seattle once a month on the Sunday 7:35AM virgin flight)
Yes, you can say public is cheaper because it is shared transport, but what i am saying is that the cost for non-shared transport is ridiculous:
Lets look at the cost/value of a trip to SFO from my house - $65.00
During the times I go to SFO and from SFO, there is no traffic - so i wont factor that in.
The cabby picks me up and it takes 25 minutes to get to SFO. It is 13.7 miles from my house.
This means that the cabby is making the equivalent of ~$4.75 per mile - OR ~$156 per hour.
Gas costs the cabby $3.50 per gallon, he also needs to pay 20% to Uber. (I know independant Uber drivers, so Ill assume he is not sharing that remaining 80% with a parent company, for ease at this point)
The car gets ~19 MPG, so at 13.7 miles, lets just round up and assume it costs one gallon to SFO, and 1 gallon back to wherever he was before my fare.
The last Uber Driver I had had just bought 3 new towncars. He said the cars were $25K a piece and last to 300K miles. Lets assume one driver with one car:
If he has a car that costs 25K over 60 months, that works out to .57 cents per hour for the car, we will round up to $1.00 to cover insurance.
So, for 50 minutes of work (lets go ahead and assume he doesn't get a customer back from SFO), with $7 gas, $1 car cost and 20% of the fare to uber, that leaves the driver $44.
SO, what I am saying is that at $44 to the driver, after expenses - that is the equivalent of $88,000 per year, assuming he were to have a fare 100% of the time. Which obviously he doesn't -- but for the time that I am in his car, I am paying him the equivalent salary of $88K for the use of his services.
This, to me, is WAY too much money to pay someone who is simply driving me to the airport.
You could take a cab instead of uber and it would be 1/2 as much. Unfortunately, the cabs in sf are crap and the companies run by assholes. I broke an ankle, was on crutches for 6 months, and took cabs daily to get to and from work. Every morning I called the same cab company -- first desoto then yellow. An honest operator once admitted they simply lie about when the cabs will come, and both services randomly gave me > 4 hour waits, from mission at valencia / 23rd, one of the population centers. Lying each and every time I called to ask where my bloody cab was. If they treat a daily customer like that, imagine how they treat randoms.
So what you're really paying for with uber is to get someone who isn't an asshole or a moron who will actually come when they say they will. Alternately, you could get up 3 hours earlier and take a taxi, praying they'd actually come, stressed out the whole time about missing your flight, to save $30.
I bet Uber will pivot rather than be involved with peak time travel the way they did on NYE. It is bad for the brand to charge ultra high rates when people are feeling festive.
Wow he managed to get a car at 1:30am after NYE? That's amazing! I'd definitely pay those prices for that kind of convenience! Would be prefer cheaper prices but no cars available for several hours? I think not.
I recall a Halloween night in SF where I and my SO waited over two hours and had to share a cab with two other partygoers who did not live particularly close to us. I would have killed (ok, maimed) for the chance to use Uber.
In two years time Uber and everyone else will have a public API to communicate their permanent variable pricing, and they'll be a ton of smartphone apps that talk to all of the APIs from all of the providers and suggest which one to take based on the current supply/demand curve and other factors.