Uber has made the concept of calling a cab obsolete, as it lets users hire a car with an iPhone or Android application. But this New Year?s Eve, Uber opted to price rides based on market forces of supply and demand, and users have complained of exorbitant prices.
Uber?s iPhone and Android application makes it easy to hire a car in key cities like Paris, New York, San Francisco, Seattle, Boston and Washington D.C. The service automatically tracks a user?s location, for easy pick-up, and will charge based on distance or time. With a promise of pick-up in less than 10 minutes, and with a sleek black Lincoln Town Car at your disposal, Uber beats hailing a cab on a cold, rainy night. You don?t even have to pay cash or take out your credit card ? the system automatically charges you for the fare, including tip.
But this New Year?s Eve, Uber decided to switch to dynamic pricing, as it usually does in times of high demand. Instead of charging the usual minimum $15 per trip, the Uber service was priced depending on supply and demand situation in their serviced cities. And with high demand during the new year revelries, the New Year?s Eve ?Surge Pricing? was at most 6.25 times higher than normal ?to maintain availability.? As such, users have complained of being charged as high as $75 for a two-minute, one mile ride.
Uber has blogged that they tried to ensure users in key cities were aware of the so-called ?surge pricing? to avoid sticker shock. Users were even advised to try again at a later time, when demand has subsided, in order to get cheaper rates. But of course, when it?s new year?s eve, you?re too drunk to drive home, and flagging down a cab is nearly impossible, hiring a car is probably something you wouldn?t want to put off until later.
Uber demonstrates a great way to use smartphone apps in practical situations (hiring or sharing a car, for example). Some have lauded the way Uber used real-world economics as a model in pricing its services, given that users can expect premium services at premium prices. But some users say Uber should have made it clearer in their iPhone and Android app how much they should expect to pay, instead of a cryptic ?multiplier? that might cause one to get shocked about the final bill.
Have you used a smartphone-based taxi or car hire service? We?d love to hear about your experiences, especially during the holiday rush.
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