This past weekend brought snow and chilly weather from north of Toronto to Washington, D.C. The conditions were perfect for staying in, but for those who went out with their smartphone, getting a ride back home via the on-demand ride service Uber seemed like a good idea. Until they got a load of the prices the app quoted.
Rides that usually cost $20 were going for $140 and above. After previous incidents where surge pricing like this wasn’t clear to customers, Uber introduced big, flashy warnings letting people know that their rate was going to be much higher than they were used to.
Still, users complained. A lot.
Uber’s CEO Travis Kalanick took to Facebook last night to answer one angry customer.
Surge Pricing email that just came in and my response. Get some popcorn and scroll down…
———- Forwarded message ———-
From: Travis Kalanick <email@example.com> Date: Mon, Dec 16, 2013 at 8:44 PM
Subject: Re: I’m OUTRAGED!
We regularly do surge pricing when demand outstrips supply. Remember, we do not own cars nor do we employ drivers. Higher prices are required in order to get cars on the road and keep them on the road during the busiest times. This maximizes the number of trips and minimizes the number of people stranded. The drivers have other options as well. In short, without Surge Pricing, there would be no car available at all.
Now granted, that the prices are significantly higher. BUT we notify every customer in big bold images in text, which each customer has to confirm in order to request. Furthermore, every customer also had to type in what the multiplier was in order to double confirm that they understood what they were agreeing to.
So, was it expensive. It was, and we wish it wasn’t necessary. But if you did indeed take the rides described then you confirmed the price which was very up front, and then entered the multiple you read into a text box in order to double confirm.
Airlines and Hotels are more expensive during busy times. Uber is as well. We don’t just charge to make a buck though, we take a small fee of the transaction, but the vast majority goes to the driver so that we can maximize the number of drivers on the road. The point is in order to provide you with a reliable ride, prices need to go up.
If you have other ideas for how to provide a reliable ride during busy times, I am all ears. In the end, Uber is reliable, always, and we will create a system that maximizes the number of people that can get safe and reliable rides. Not surging is saying you shouldn’t have the option. Not surging is saying we should be just like a taxi and be unreliable when people need us most. These are outcomes that take choices away from the consumer and make it harder to get around cities – these are outcomes that we put a lot of hard work in to avoid so that at least you have the choice if you want one.
While Kalanick’s email isn’t as popcorn-worthy as we know his exchanges are capable of, it’s clear that Uber is happy for now with its approach to pricing.
People began responding quickly to Kalanick’s post and served as a Greek chorus of the sharing economy. As one commenter pointed out, “It’s not your actions that are causing the blow back, but rather the gap between what you’re doing and your *brand values*, IMHO. This feels brazen and not in keeping with Uber’s position as a champion of service, and it won’t get better anytime soon.”