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Your Complete Guide to Uber’s SURGE Pricing

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How Surge Pricing Works

Uber’s pricing algorithm automatically notices (for a specific locale) when there are situations of high passenger demand and low driver supply and hikes the regular price by a multiplier.

For example we analyzed the rates for Boston, Massachusetts as at March 15th, 2016, and show a sample scenario where the surge multiplier is at X5

Regular Rates:

  • Base Fare:  $2.00
  • Per Minute: $0.20
  • Per Mile: $1.24

Surge Rates:

  • Base Fare: $2.00
  • Per Minute: $1.00 (this is $0.20 X 5)
  • Per Mile: $6.20 (this is $1.24 X 5)

In this scenario, as you can see above, the passenger will potentially pay 5 times more for this surge trip than normal (with a X5 multiplier).

So a 10 mile ride that might cost about $15 would now cost about $75, all other things being equal.

For the curious, the maximum surge multiplier for any market is supposedly X50 (see http://www.businessinsider.com/ubers-highest-surge-price-ever-may-be-50x-2014-11); however, Uber has not confirmed this.

Uber claims that this policy was put in place to get more drivers on the road whenever there is an increase in demand.

The policy seems to have been very effective since it came into play in 2012.

One of the board members, Bill Gurley wrote about it when it was first tried out in Boston saying:

By offering more money to drivers, they were able to increase on-the-road supply of drivers by 70-80%, and more importantly eliminate two-thirds of the unfulfilled requests.

The surge in price is also constantly examined by Uber’s human staffers – who have it within their reach to use their discretion to lower prices (at rare times when they find it necessary).

Travis Kalanic, after a major surge on New Year Eve in 2012, simply wrote:

To our dismay the pricing multiplier kept going up.

At some point the east coast cities started breaking 6x multipliers—we accepted defeat at that point—the unbending demand breaking our will.

We would bring cities down to 3x, only to see conversion go up, supply go down, cars get saturated, and “zeroes” popping everywhere.

By zero here, he meant unfulfilled rides.

How Surge Pricing Affects Drivers

One thing new Uber drivers do is “chase the surge”.

If you do not know what that means, here is a quick primer:  “Chasing the surge” involves a couple of steps:

  1. An Uber driver first identifies an area (zip code maybe) that is currently experiencing a surge in prices.
    Typically this Uber driver would download the passenger app to determine where the price surge is presently
  2. The Uber driver will then drive to the surge area
  3. This driver will then turn on the Uber driver app, to start receiving requests in the surge area

The problem with “chasing the surge” is that more often than not, by the time you are at the surge location, the surge pricing is over.

Also, if you drive during the surge you have a higher chance of getting negatively reviewed by the unhappy passenger who is paying more than the normal passenger fare.

Some drivers even hope that someday Uber temporarily disables the rating portion of the Uber ride process, for rides where surge pricing is more than 2X the normal rate.

Ultimately, the surge pricing is a double edged sword for Uber drivers: You potentially kill it on pay day because of exponential increases in fares; however you also risk getting kicked off the Uber platform, if you get enough bad reviews from unhappy Uber passengers.

How Surge Pricing Affects Passengers

vector graphic showing an illustration of surge pricing

We have come to understand that not all Uber riders can afford to order an Uber car when there is a surge in fares.

In fact, some people who really intend using the high-end uber black service change their choice to the regular UberX service during surges, while some others choose to get notified when the surge pricing is over.

For new Uber passengers, one fact you might not know about surge pricing is: It does not last long.

A post on the same topic on Policygenius described surge pricing as “more of a ‘rush minute’ than a ‘rush hour’”.

This means that if you are not in so much of a hurry, the surge rate is something you can simply wait-out.

Relaxing a few minutes before trying again is typically all it takes to avoid a surge, In our experience a 15 minute wait is sometimes all the patience you need.

So what do you think about Uber’s surge pricing?

Let us know in the comment section of this post.

11 thoughts on “Your Complete Guide to Uber’s SURGE Pricing”

  1. Surge pricing tried to take advantage of me coming out of the eye doctors office. I only caught it cause I was not dilated. There even scamming the disabled. They run honest cab services out of business and scam disabled.
    Don’t have a choice. Have one more idiot to look out for.

    Reply
    • You were not scammed. If anything, you are trying to perpetrate a scam. More likely, though, you just don’t understand basic economics, or that other people have the right to value their own time.

      Sure, it’s annoying to have to pay more for limited supply, but if you had the only car in the world, would you REALLY charge people only a dollar to drive them across the country? Things are worth what people are willing to pay. If you’re willing to pay that, then it’s worth that. If you’re not willing to pay that, you’re free to walk or take the bus. No one forced you to get in my car, but if I have a choice between transporting 10 people 10 miles for $50 each and transporting one person 10 miles for $5, I’ll take all those $50 rides and the $5 person can find some other arrangement.

      Reply
  2. Surge pricing is terrible I had to pay $28 dollars to ride 2 miles home (which I usually would just walk) because of typical Central Florida afternoon thunderstorm. And I even waited 30 minutes for the surge to subside, it did not (neither did the thunderstorm) so I got soaked from UBER instead of from the weather. Will think twice and maybe go ahead and brave getting struck by lightning next time.

    Reply
    • Blame your own impatience. I have rights too, such as the right to value my own time as I see fit, same as you, only I have something you WANT (not NEED). You could still have walked, you could still have waited out the storm/surge, no one forced you to buy a ride you didn’t NEED. You chose to buy the luxury of not getting rained on and not waiting. You chose to divert me away from someone who might’ve paid more, or might’ve NEEDED me to take them to the hospital because I’m faster than an ambulance, or been more appreciative of the time, effort, and money I spend to get you where you’re going quickly, safely, and comfortably. I am not your slave, you are hiring me to do a job for a price that is fair to me too, and you have to compete with all the other riders who DO appreciate me.

      Reply
  3. I think surge pricing stinks. I have medical issues and only use Uber for important doctor appointments, and soon, dialysis. With dialysis, I would like to schedule the rides in advance to the facilities. Because of this scam, I have to reevaluate how to get to certain doc appointments.

    Reply
    • Absence of surge pricing stinks. I have bills to pay and mouths to feed and receiving only $4 on a 10 mile trip doesn’t even pay my maintenance, gas, and depreciation. It also doesn’t make it worth my while to pick up hateful people who think I am their slave and that I should just cart them around everywhere for free. Why can’t the Uber driver app tell me my prospective passenger is a lazy jerk who cannot be pleased even when I deliver the sun and moon to them? Because of this scam, I have to reevaluate how to differentiate between people who appreciate all I do for them and those who take me for granted.

      /s

      Reply
  4. As an Uber driver I could not believe a single Mom needing to pick up her kids from day care and school would be able or willing to pay $50-70 for a short short. A gave a ride when I have a$32 surge and asked how much he paid for the ride. $14 was his answer. How is this so? He was sure if what he paid and I got the full $32 on top of the normal fare.

    Reply
    • What the passenger pays is not tied directly to what Uber pays you. This allows them to sell discounted ride subscriptions to passengers, while also paying you surge prices. The OVERALL percentage you get is around 50%, but individual rides may be much lower or higher (even over 100%).

      Reply
  5. This is a trick Uber playing with its customers. They can simply quote the actual price and if the customer and driver agrees the trip can be confirmed. Instead showing a surge rate, is a complicated issue. Govt regulatory authorities must focus in this issue and make deals simple.

    Reply
    • I agree. I’ve lamented to Uber many a time (when they ask my opinion) that they need to INCREASE transparency. All the time, people wonder why they paid $20 to get to the major event with 100,000 people, but are “forced” to pay $100 or more to go back to where they came from during the massive rush afterward. And personally, I’d like to know why my cut of that 5x or greater price increase only goes up about 2x instead of 5x or more. I’d also like to know why they stopped giving me pricing information for each trip like they used to so I could see for myself how much they were ripping me off, I mean, cutting me in for. This is basically an agent-client relationship, according to them, they should only be taking 10-15% of the pay (on average), not 50%.

      Reply
  6. I am an Uber driver. And I still don’t understand everything about surge pricing. However, I am not liking the new method that Uber is using in 2023. It used to be that I would be able to drive into a surge and get that surge amount in addition to whatever I would have gotten paid on a particular ride. But now, Uber just adds it all together and says this is what you’re getting paid and it already includes the Surge price. It just makes no sense to me that I get a ride request for $20 while I’m in a $2.50 surge. Yet when I get there it says that I have a $15 surge. But…I’m still getting paid only $20 for the ride. How can that be, when at a $2.50 surge I was going to get $20. Why didn’t my pay go up when I entered into the $15 surge Zone? None of this makes any sense. And I am not happy with it. Something’s not right here.

    Reply

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