It's time for everybody's favorite New Year's Eve tradition: complaining about Uber surge pricing.
Now, for the uninitiated, Uber is the smartphone app that lets you order car service on demand. Emphasis on the "on demand" part. The idea is to always keep the supply and demand of cars neatly in line, so there's never much of a wait. But how do you keep supply and demand in line? Well, as any Econ 101 student can tell you, with prices. In other words, Uber charges more—a lot more—during peak times to get fewer people to demand rides and more people to supply them.
It's basic economics, and horrible P.R. Back in mid-December, a Saturday night snowstorm sent Uber prices up 7 to 8 times more than normal—as much as $90 for a 3 mile trip. People were not pleased, and wrote many strongly-worded tweets. But there's not much Uber can do about this. If it didn't raise prices as much, people would have to pay more with their time—that is, wait—instead. And Uber is about not waiting.
So to head-off the same kind of backlash, Uber has released a how-to guide for avoiding surge pricing on New Year's Eve, typically their busiest night of the year. As you can see below, your wallet won't feel the holiday if you take Uber before 8 P.M., between 10:30 P.M and midnight, or after 3 A.M. You know, the times when everybody else isn't trying to get a ride too.
But will this kind of surge price warning work? Maybe. As Neil Irwin of Wonkblog points out, people don't complain when they pay more for non-matinee movies or Thanksgiving airplane tickets. They think it's fair to charge more when people demand more—as long as it's expected. See, weekends and holidays are pretty predictable periods of high demand. So people can plan around them if they don't want to pay "surge" pricing for movie or airplane tickets.
Uber's problem isn't that it charges more on New Year's Eve. Its problem is that it charges more when the weather outside is frightful. People just don't expect to pay more during a snowy night, and they certainly don't expect to pay 7 to 8 times more. That makes them feel like they're being taken advantage of. And—as economists confirm!—people really don't like to feel taken advantage of.
Now Uber just needs to convince us that bad weather is a holiday.
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