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Uber Changes Pricing Model With Increased Fares For High-Demand Routes

Uber Price Increase
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* Following complaints, Uber addresses increase in fares
* The new “route-based pricing” is intended to charge more for high-demand routes
* Some speculate fare is determined by socioeconomic status of one’s location

After months of complaints from riders and drivers, ride-sharing app Uber, is addressing the subtle change in pricing you may have noticed, Bloomberg and Business Insider reports. Uber is calling their new pricing system “route-based pricing,” which determines prices for passengers based on how much money they assume passengers will pay for rides based on machine learning.

In the past, Uber’s pricing was based on mileage, distance and demand in the area of service. Last year, Uber released “up front pricing,” which was intended to ensure greater transparency for pricing considerations for both drivers and passengers.

Pearl Necklace
1 year
Increased Fares For High-Demand Routes" - that sounds like a bit discriminating for other passengers who are...

Pearl Necklace
1 year
Increased Fares For High-Demand Routes” – that sounds like a bit discriminating for other passengers who are…

The new model will charge extra to certain customers who travel along particularly high-demand routes. Uber admitted to Bloomberg that their new pricing model has been quietly being tested in 14 cities in the U.S. where UberPool is available. But while prices will be raised in these cities, drivers won’t see increased compensation for rides, as these extra funds are said to go to promotions, with ultimate goal of reducing wait times for passengers.

Uber’s head of product, Daniel Graf told Business Insider thatthe new pricing model will help create more trips in the cities, which will in turn lead to a better experience for passengers. “More trips in the city means less wait times and shorter pickups time for riders and drivers,” he said. However, others are insisting that new prices are being determined through profiling rich vs. poor clientele. Bloomberg suggested that the new pricing system actually aims to charge wealthier customers more for rides without alerting them of premium pricing. For example, riders travelling to a destination in an affluent neighborhood would be charged more than someone in transit to a less wealthy area of town, regardless of geographic demand, mileage and traffic. Graf disputed the claim, telling Business Insider that the route-based pricing isn’t “…personalized. This has nothing to do with the individual,” he says, insisting that the change in fares is reflective of high-demand routes.

The new pricing model follows a slew of PR mishaps surrounding Uber, including reports of sexual harassment and discrimination against female employees as well as January’s #DeleteUber campaign, which resulted in 200,000 users deleting their account after the company reportedly intended to profit from a protest of President Trump’s executive order banning refugees from entering the country.