STRATEGY

Uber's Convenience May Trump Outrage Over Surge Pricing

The app-based cab service unapologetically says increased prices during inclement weather means more drivers on the road. Customers may not like the cost, but they like being stranded even less.
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Uber made a decision last weekend: The mobile app taxi service is more concerned with the reliability of its supply of cars than what users think of its cost.

The company's decision to add bad weather to its "surge pricing" during a snowstorm in New York City created a blizzard of angry customers--many who agreed to pay seven times more than regular prices for a ride home. But in spite of the reaction, Uber CEO Travis Kalanick seemed to have little sympathy for customers who had to deal with increased prices, telling Wired that the surge was all about making sure there were enough cars on the road.

"Surge pricing only kicks in in order to maximize the number of trips that happen and therefore reduce the number of people that are stranded," he said. He compared Uber to a Louis Vuitton handbag--a luxury item people buy at high prices without accusing the company of gouging.

Such comments are unlikely to help the image of a company that has already upset users. But Kalanick is banking on a less-vocal portion of his customer base, one for which the convenience of Uber's service trumps concerns about its cost. 

Brian Keating, an account manager at an enterprise software company in New York City, says Uber riders have no right to complain, especially considering they are the ones who hit the "I accept higher fare" button to activate the service.

"At the end of the day, you know exactly what you are getting and the convenience is unmatched," Keating tells Inc. "You see the price hikes and have to agree to it, so it's not being hidden from you. You know exactly what you're paying."

Keating, who is a regular Uber user, says that the pricing policy isn't ideal, but that cost doesn't enter into why people use it. "People who are using Uber know what they are getting into. Everyone who uses Uber can reasonably afford it and agrees to it. This won't prevent many people from using it."

Kevin Daum, an entrepreneur and Inc. contributor, agrees that Uber's price surging may alienate prospective customers, but loyal customers are likely to stay. 

"Uber has made a decision that their customers are tech-oriented. As a New Yorker, I know how to find the cheapest car service, but Uber users are people who like to use apps and are less likely to to a quick search through other means," says Daum. "Is this a good decision, or a bad decision? Only time will tell. But Uber has decided their business model is most important."

 

What do you think about Uber's reaction to the price-surge backlash? Let us know in the comments below. 

IMAGE: Bloomberg/Getty
Last updated: Dec 17, 2013

WILL YAKOWICZ | Staff Writer | Reporter, Inc.com

Will Yakowicz is a reporter at Inc. magazine. He has covered business, crime, and politics at Patch.com, and his work has been published in Tablet Magazine and The Brooklyn Paper. He lives in Brooklyn, New York.




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