Uber, the private car service company that is a darling of the startup and tech scene in California, has started offering its service to other major metro regions, including New York City, Seattle, Chicago, and Boston. Uber contracts with private town car drivers, who then use Uber to find riders. The idea is to offer a better service than taxis can provide, as cars usually arrive within 10 minutes from being requested and, well, you get to arrive to your destination in style.
While Uber has positioned itself as an alternative to taking a taxi cab, Uber does cost significantly more on any given trip. Some riders in both San Francisco and Seattle have estimated that an Uber trip costs twice as much as the same trip would take in a cab. In a city like San Francisco, the convenience of not waiting an eternity for a cab obviously makes this price difference worth it. But what about in other areas, where taxis are prevalent (Seattle) or one of the primary methods of transportation (New York City)? Depending on your lifestyle, you might not need to answer that question, but let’s face it: today’s economy sucks, and taking a town car around regularly is beyond the budget for most of Uber’s targeted demographic (which seems to be young people living and working in the city).
To add insult to this injury, Uber announced that “surge pricing” will be in effect for the Halloween weekend. After Uber experienced nearly a complete lack of drivers last year, its response this holiday is to increase prices at least two times to account for the demand for Uber as costumed partygoers make their way around town. This is in part due to how many people want an Uber, and also in part to keep Uber drivers contracting with Uber on these busy nights (as they can raise their prices because of the demand for private drivers). To keep everyone happy — and by everyone, we mean Uber and its drivers — the service will use surge pricing to manage supply on the Friday and Saturday before Halloween so that there will be enough drivers interested in picking up Uber riders.
In a city like Seattle, where taxis are not really that hard to find — even on social holidays like Halloween — this prices Uber into a true luxury option. Uber is easy to use, but when it will cost four times what a taxi would on a holiday, many urban dwellers will be forced to take that cab — if only because Uber will be totally out of their budget. While Uber CEO Travis Kalanick says that “if taxis are available, there won’t be a surge,” this doesn’t take into effect that many people may choose Uber first, spiking the price, and forcing the rest to take a taxi when they can no longer afford Uber.
As Uber continues to expand, it will be interesting to see if users like this variable pricing option. Uber has developed a loving and dedicated user base (mostly in part to social media), that may be willing to pay the extra cash just for the service it adores. But as more users sign up, expecting a fair-priced alternative to taxis, will Uber continue to put into effect surge pricing on future social holidays like New Year’s Eve and the Fourth of July? Uber says to “stay tuned” for more info on future holiday pricing.
Would you pay up to four times the cost of a taxi to take an Uber town car in your city on Halloween? Or is the price of luxury too much for you? Let us know what you think of the Uber service in the comments.
Update: On New Year’s Eve 2011, Uber activated surge pricing again, this time spiking prices as high as 6.25x normal rates. Some riders reported paying as much as $135 for a two-mile ride.