Uber Will Start Charging You What They Think You’re Willing to Pay
More ways the machines are trying to “help.”
Sometimes you get in an Uber to, say, go to the airport and find that it costs way less than you expected. Sometimes it costs more. Most of the time it feels right enough — cheaper than a Lyft, maybe, but still expensive enough to feel like a luxury. Now, Uber is futzing with its pricing once agin, rolling out a new pricing strategy that will charge customers based on what they think they’re willing to pay.
Right now, Uber lets you know what the price of your ride is going to be before you agree to take the ride, which means you don’t get in a car thinking you’re paying one thing and then end up paying another. This is sort of an attempt to fix the issue that Uber drivers have had with the gap between what a rider pays and what the driver actually makes. With this new system in place, Uber will start telling drivers how much a passenger paid for a ride, but they still won’t break down the arithmetic that shows how much the company takes. Better than nothing, I guess, but still not awesome.
Here’s how this new thing works.
The new fare system is called “route-based pricing,” and it charges customers based on what it predicts they’re willing to pay. It’s a break from the past, when Uber calculated fares using a combination of mileage, time and multipliers based on geographic demand.
Daniel Graf, Uber’s head of product, said the company applies machine-learning techniques to estimate how much groups of customers are willing to shell out for a ride. Uber calculates riders’ propensity for paying a higher price for a particular route at a certain time of day.
So, if you’re riding from a fancy part of town to another fancy part of town, Uber will charge you a little more. If you’re riding from the aforementioned fancy part to a part that is less fancy, they’ll charge you less. Mileage doesn’t matter — it’s location, baby. If you’re trying to get from Point A to Point B in the less-fancy part of town, they’ll also charge you less. Is it rude of Uber to make assumptions about how much you’re willing to spend on a car ride based on nothing more than your location? Maybe.
Uber will calculate all of the various data points here via “machine-learning,” which sounds…cheap for them and potentially bad for riders. Making broad assumptions about someone’s ability to pay $19 instead of the usual $12 for a car ride from one place to another by their location and the time in which they request that ride shouldn’t be left to the machines, or anyone really. The algorithms are not ever going to be able to replace human judgment.
But in theory, it’s nice that the app will charge less for customers in “less-desirable” neighborhoods. In theory, this will make the app more affordable for everyone. What if that doesn’t work? What if drivers stop going to those neighborhoods because they get higher fares in the others?
“Society is more willing to accept wealthy people paying higher fares,” said Chris Knittel, a business professor at the Massachusetts Institute of Technology. “But if the repercussion of lower fares in lower-income places is longer wait times, that’s probably what they want to keep an eye on.”
I understand that Uber’s doing this for their bottom line, but in light of all the other problems they’ve faced recently, rolling out a new pricing plan that sounds like it could be disastrous for their public image seems like a bad idea. They have to make money somehow, so I get it; if it works out in theory that rides in lower-income places are actually cheaper, great! Otherwise, I’m curious to see how Uber will handle the inevitable blowback when those very same lower-income neighborhoods that were previously served just the same as higher-income neighborhoods find themselves left without Uber as an option.
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