Uber and Lyft Surge Pricing: Understanding The Dynamic Pricing for Rideshare Apps
Anyone who spends a lot of time driving knows this well: the price of fuel at the service station often changes during the day, sometimes even while refueling. It is a striking example of “dynamic pricing”, also known as “dynamic price management”.
Behind all this lies an instrument as old as trade itself. Dynamic prices, i.e. flexible and versatile prices, adaptable to the market situation, is not entirely new. It has been in use since the 1980s for example when you buy a ticket or book a flight.
The concept contributes to the control of the sale for consumer goods and services. However, in the digital age it has moved to the next level, with algorithms.
Despite the coronavirus pandemic Uber is still operating. If you recently needed a ride, you saw that Lyft and Uber prices increased in 2020. So Why are Uber prices so high?
With this guide you will learn everything you have to know about the Uber surge pricing and dynamic pricing. We will also propose to you the alternatives and solutions to avoid the surge charge.
If you already know what surge means, you can apply the concept to the San Francisco headquartered company.
According to dictionary.com the surge definition includes a strong, wavelike, forward movement, rush, or sweep.
As we said, the evolution towards "customized" and sometimes exorbitant prices, powered by algorithms or other forms of automation, is not entirely new. In 1999, for example, the idea of a temperature-sensitive vending machine came to the then CEO of Coca-Cola.
Although the machine never made it to the market, in the transportation industry including ridesharing, algorithms are "observing" customers and setting prices dynamically.
Uber operates 24 hours a day, 7 days a week, at night in a city where public transportation shuts down, using Uber is a safe alternative. The rideshare company is available in many countries around the world including the United States, Italy and France.
So, how does Uber implement dynamic pricing? Uber adjusts the prices of their rides in real time and thus responds flexibly to market demands.
This is the main reason why Uber prices change.
Indeed, prices and driver earnings in this business depend on demand and offer. When demand for rides increases or availability of drivers decreases prices will adjust to match demand.
Summarizing: The Uber surge pricing can be summed up as the relationship between demand for the service, the supply of that service, and the price that consumers are willing to pay.
If you are a rideshare driver I’m sure you already know what the surge pay is, because it makes the difference in your wallet. Gig workers are independent contractors. They have to pay for their car maintenance, gas. Finding creative ways to save gas money by finding cheap gas or using Getupside app is a key to success.
The Uber driver app gives you the power to make money providing different kind of rides including:
However, the goal is to work during the peak hours. Right now, demand for ridesharing is picking up faster than availability of drivers and that results in higher prices and earnings especially in some parts of the country and at some times of the day.
If you are an early bird or want to work at night, ridesharing will usually be a more rewarding option than food delivery.
There will typically be less demand from customers at night or very early in the morning but definitely less competition and you will typically get longer and more rewarding rides. We suggest you drive for Uber and Lyft at the same time.
However, you should try to avoid unsafe areas and probably use a dash cam to protect yourself.
Related Article: Make more money driving with Lyft.
Whether you are an Uber driver or rider, it is pretty simple to understand.
With the Uber surge map, Uber allows drivers to see where the greatest demand is. The idea is to encourage drivers to go to surge areas to alleviate the shortage.
The numbers are a surge fee on top of the regular fare.
Take a look at our guide to learn more about the Uber rush hours and best times to drive for maximizing your income.
Have you ever opened the Uber app, started to request a ride and got an expensive price? The boggest difference between Uber and taxi is surge pricing.
The result is stratospheric ride prices.
With their dynamic pricing model Uber and Lyft raise the price when there is high demand and not enough drivers.
Passengers will pay higher rates, the price of a ride can even jump 50 percent or more.
Additionally, during the past months a lot of passengers had to face long waiting times.
At this point it would be interesting to understand how Uber dispatches. Recently we received a message from a concerned Uber rider. When he tried to book a ride the Uber app was stuck on waiting for a long time.
Generally, the match works pretty easily. When a driver is logged in in their driver app, the Uber algorithm assigns them pickup requests from people nearby.
However, on top of a pricey fare, longer-than-normal wait times for Uber and Lyft rides have become common in biggest cities including:
You will also be able to check Uber prices before ordering. However, keep in mind that some charges are not reported on the estimate. We suggest you consult our complete guide to Uber fees.
So, if you want to check if Uber is surging follow our step by step tutorial:
Finally, surge hours are typical at night or during the busy daily commute hours.
Related Article: How Much Does Uber Cost
The situation left Uber riders feeling deceived.Uber announced it will spend $250 million on a one-time stimulus to convince drivers to get back on the road.
So, Uber is looking for drivers. However, with our experience we can confirm that the San Francisco headquartered company has grown into a large corporation and since their IPO they seem to care more about general expenses than driver satisfaction.
They shut down their affiliate program, the driver referral program and the drivers advantages seems ridiculous, especially if compared to their main competitor: Lyft
The dynamic price strategy is used in most sectors including Amazon, Microsoft. Price changes often cannot be avoided, for example when there are seasonal constraints, such as in the pre-Christmas period, when prices rise and then fall later.
In many cases, however, we can take advantage of the variation in prices. Dynamic pricing can be in some way absolutely beneficial to the customer.
With the Uber app you can choose different types of ride. Uber Pool is one of the cheapest transportation options on the platform.
You should always pay attention to the time of day. On the weekend or in the evening, when many users are requesting rides, the prices can significantly increase. If there are fewer riders during the week during the day, prices can drop dramatically. Often they also vary from day to day.
Before booking a ride, you should always compare the prices of different ride hailing apps. Uber is not always the cheapest rideshare company. However with the real time pricing you can easily compare the offer and find a competitive price.
If you are looking for a way to ride for less, electroniscount coupons, as well as discount codes, allow you to significantly reduce the price of services. At Bestreferraldriver we love coupons and help you save money.
Here are our 100% working coupons that will help you save money on your next ride:
By redeeming our discount coupons, the dynamically generated price will also be reduced accordingly.
Sometimes it is hard to find cheap rides to the airport. To avoid surge payments the best options will be:
Related Article: Waze vs Google Maps
If you are curious about the Lyft surge pricing, Lyft calculates fares very similarly to Uber. So, it works pretty similarly to Uber surge.
When the ride requests increase unexpectedly, Lyft offers a Prime Time bonus to their drivers.
Lyft is a successful company that understands economic supply and demand theory. With new driver promotion, Lyft was able to improve access to rides reducing the waiting time.
According to Lyft, their solutions helped refound a balance since the month of May. Here are some stats:
Dynamic pricing is a global and ever-growing phenomenon. Innovation is always new and insecure, but in the end, those who are closed to new ideas and react too late are mostly left behind.
Now you know how surge pricing works for Lyft and Uber. Use our tips during the rush hours and you will be able to avoid the surge pricing.
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