Uber’s dynamic pricing may not drive drivers

Uber’s dynamic pricing may not drive drivers

Surge pricing intends to pull drivers to busy areas, but a new study says drivers avoid busier areas.

If you use ride sharing apps, you may know that Uber’s pricing policies vary depending on where and when you call for a car. Now a new study suggests that Uber’s practices may be backfiring among drivers, who actually tend to avoid higher traffic areas even with the prospect of more lucrative rides.

The researchers from Boston’s Northeastern University looked at Uber ride sharing in New York and San Francisco, according to the San Francisco Chronicle. Their study found that Uber’s “surge” pricing, which raises fares for rides in areas where demand is higher, does not attract drivers as intended.

However, the study did find that surge pricing diminishes demand, meaning that riders in the higher priced areas did not wait longer for a car.

To conduct the study, the researchers created forty-three Uber accounts and used GPS coordinates to track rides geographically throughout the cities, without actually calling for or cancelling any rides.

Tracking data from over two weeks last spring, the study found that most surges do not last long, suggesting that patient riders could simply wait until a surge subsides to get cheaper fares.

One Uber driver suggested that experienced drivers avoid surges, given the difficulties faced by chasing after potential riders in city streets clogged with traffic. He suggested that surges are mostly served by newer, inexperienced drivers.

Uber denied the findings were realistic and noted that their internal data shows that surge pricing impacts different drivers in different ways but has shown to attract drivers to busier areas. The company has applied for a patent for its dynamic pricing algorithm, which it says is essential to its business model.

Be social, please share!

Facebooktwittergoogle_plusredditpinterestlinkedintumblrmail