Is Uber Surge Pricing Fair?


Uber has come under fire for its surge pricing, but the company says by increasing the price at peak times, they're maximizing the number of cars on the road—ensuring that everyone can find a ride home. Who's right?

ridesharing price hike

This Halloween night, a woman I’ve never met named Gabrielle Wathen and I had similar problems. She was celebrating her 26th birthday; I merely the holiday. She planned on using Uber as her safe ride home; I did too. But my night ended in a considerably less expensive manner than Wathen’s did. Standing in the hallway of an Austin house party, I opened the Uber app around 1:30 a.m. and noticed that Uber was experiencing surge pricing. I closed the app and tried Lyft, but had no luck finding an available driver. By the time I opened the app back up, surge pricing had already jumped from 2.8 times the normal rate to 3.1. I decided to go for it—I didn’t have far to go, and I needed a safe ride.

[shareline text=”Gabrielle Wathen’s 20-minute Uber ride cost her $362.57.”]

The damage was relatively insignificant: Thanks to Uber surge pricing, I paid $23.94 for a seven-minute ride of 1.97 miles. Normally, my cost would’ve been just $7.40. In my mind, totally worth it. But the other truth is, I hadn’t planned on or prepared for surge pricing. (Uber is still fairly new to Austin.) I noticed that Uber made me type in the variable by which they were multiplying my fare, forcing me to acknowledge that I understood I was indeed paying three-point-one times what I normally would for the ride. I wasn’t thrilled, but I was safe.

Wathen, on the other hand, found herself in a slightly different situation. She summoned an Uber later—3:00 a.m.— and her 20-minute ride cost her a whopping $362.57.

Here’s how Wathen explained her situation:

Last night was Halloween. Great time. Today is my 26th birthday. Not so great time. I live in Baltimore and went out with my friends to celebrate my birthday at midnight. When 3 AM rolled around, I suggested we take an Uber hole to avoid drunk driving (#responsibility/#MADD). I live 22 minutes , tops, from the party I was leaving.

When I awoke this morning, I heard a friend talking about how outrageous Uber rates were the night before (9x original rate). I checked my bank account to, unbeknownst to me, I see a charge for $362. Not only is it my 26th birthday, it is rent day. My rent is $450 and I can no longer pay it today due to this completely outrageous charge.

I have had little to no luck in disputing this transaction.

I waitress at two restaurants and freelance for a City Paper. I worked incredibly hard this week to be able to enjoy my birthday this weekend. This misunderstanding has cost me 80% of the funds I have to my name (embarrassingly so) and I spent a good two hours of my birthday crying over it.

I feel taken advantage of and cheated by the Uber name. $367 for a 20 minute ride should never be justified, even on Halloween. Please donate even just $1 if you think this is utter and complete bullshit and also hilarious and very, very depressing at the same time.

Thanks for the ride, Muhammed.

User Error or Uber’s Fault?

Uber, for its part, sent Business Insider the following statement in response to Wathen’s accusations:

Uber ensures a safe, reliable ride, wherever and whenever, and dynamic pricing allows us to remain the reliable choice, even on the busiest nights of the year. Our in-app features ensure dynamic pricing is repeatedly communicated and approved before any trip is confirmed.

In other words: You have to approve the surge pricing before you order the trip. I’d had more than a couple vodka-soaked gummy worms Friday night, but I was clear-headed enough to understand that by accepting the ride, I was going to be charged considerably more than I had on the way over. I was not surprised by the email the next morning.

But whether it was Uber’s fault or her own, Wathen was surprised by the staggering bill. So, she did a very right-now thing: She crowd-funded it. Her GoFundMe page has since been taken down, but she did it—Whalen’s page, “Uber Stole my 26th Birthday,” had raised $512 of a needed $350 by Sunday. Then the page came down. The original Instagram shot of her receipt has also been taken down.

More On Surge Pricing

Uber says its surge pricing allows them to maximize the number of cars on the road. In terms of supply and demand, it makes sense—if someone is willing to pay an additional amount for a ride, they will have one available to them if surge pricing is in effect.

CEO Travis Kalanick explains in a post about New Years Eve and surge pricing:

We are able to get a far greater number of drivers on the system when Surge Pricing is in effect – it’s basic economics. Higher prices encourages more supply to come online. It gets some drivers out to work on NYE. It keeps other drivers from going to alternatives like renting their car out for the night, or trying their luck at hustling rides on the street. Higher prices means more cars, means more rides, means more people getting around the city efficiently, safely AND in style.

So what do you think? Was Wathen duped—or were the people who supported her crowd-funding effort for her pricey Halloween-night ride the ones who had the wool pulled over their eyes?