Thursday, November 12, 2015

What Is Surge Pricing?

Surge charging or surge pricing is a method used by Uber and Grabtaxi to “encourage” more of their drivers to be on the road. The way it works is really very simple; when the companies have a period of high demand, the pricing for their drivers’ fares increase thus allowing their drivers to earn more per trip. This in turn encourages more of their drivers to go online to pick up passengers.

A few days ago, a lady in Singapore posted on Facebook that she took a 27 mins trip and was charged $169 for it. The lady, Ruby Lambert, was rushing for a meeting with four of her colleagues, and she made a booking on Uber. As there were 5 of them, she made the booking under “UberExecLarge” and blindly accepted the surge pricing. According to Ms Lambert’s Facebook post, the trip was uneventful…till she got the bill.

I’m sorry but Ms. Lambert and Singaporeans better get used to the concept of surge pricing. This is the way Uber works; the higher the demand, the higher the charge; and a charge of $169 for a 27 mins trip is almost nothing to the horror stories from overseas. Last year, there was a hostage crisis in Australia and Uber charged their customers $100 minimum for 1 trip. Can you imagine increasing fares 4 times during a hostage crisis? Under surge pricing, it can happen. 

As the population of normal taxis goes down in Singapore, more people will take to Uber and Grabtaxi. This will in turn increase the chances surge pricing. So Singaporeans better get used to this concept. As long as Uber and Grabtaxi are around, this practice is here to stay. 

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