UBER’s Surge Pricing is Good for all

This seems to beat the common discourse of our times. Give me a minute to explain why surge pricing is good, though annoying.

Who complains about it? We, the customers, right? Let’s start analyzing how surge pricing is good for us. We all know, many a times, UBER fares are lower than the normal taxi fare and that’s one of the reasons why we love it. We also understand that UBER has to make a decent money to be able to keep giving us service consistently. So, they need to make money. I guess, they do not make profits from each of their trips, rather they try making money from a bunch of trips undertaken over a period of time unlike the regular taxi operators. Further, no enterprise will self-sustain if it sells its products or services at a loss. Hence, discounted fares cannot be the norm. The customers want the enterprise to thrive and hence, must help it earn fairly.

Secondly, UBER has copy-pasted the practice of dynamic pricing which is followed by airlines, traders and so on. On the Friday evenings, rainy days, Monday mornings, Sunday evenings and similar such occasions, it is natural that the demand is high and the rush to get to the destination is high. And the supply of drivers and cars at these hours is likely to be high as well. However, the demand and supply might not be matching exactly. So, the prices surge, some customers find alternates and the demand gets rationed a bit. Again, it’s a good thing for the customers to be able to avail the services rather than waiting for long times and potential drop in quality of service.

Last but not the least, one wonders how much of surge pricing is ethical. Apparently, in the USA, the pricing goes to 7x at certain times. This seems crazy and outrageous. Should there by a regulator or some kind of intervention from the government? We like the era of free economy and hence, must allow some one else to emerge as a credible alternate. We have seen camera rolls having vanished, point and shoot cameras are staring at near-extinction, ticketing agents facing survival questions, politicians losing elections and so on. All these happen because they did not see the coming of an alternate. If UBER does the same and thinks that surge pricing is their cash cow, they would lose the game.

Assuming that they are not being greedy and profiteering, surge-pricing is good for us!

This phenomenon of sharing economy and dynamic pricing have a significance for each of our jobs and the industry sectors that drive our lives. So, we need to be thinking of the customer that we cater to and how we can impact the life of the customer for the better!

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