Was Uber over the top with New Year demand pricing?
Uber is reportedly handing out refunds or credits on a case-by-case basis after facing a social media firestorm on New Year’s Eve over its “surge pricing” for on-demand car service.
The company, which operates a on-demand car services via its mobile apps or text message in cities such as San Francisco, Seattle, Chicago New York City, Washington, D.C., and Boston, issued a couple of blog posts, including this one, to justify why it boosted prices exponentially on New Year’s Eve to meet the holiday crush.
The prices hikes, which Uber says was meant to ensure that there were enough cars available to meet demand, led to a barrage of tweets such as this one from Aubrey Sabala, complaining that Uber charged her $107 for a 1.5 mile ride on New Year’s Eve.
And, there was this sarcastic tweet from Gabe Rivera, wondering why Uber’s rates were equivalent to asking him for a 5% stake in his company.
Uber claims it was transparent about the entire episode, warning customers before they requested service at one point, for example, that rates on New Year’s Eve were 6.25 times higher than normal, and if they waited awhile, then prices would dip.
Uber says it also notified customers in October about surge pricing — which is not to be confused with the US surge in Iraq — through a blog post and email, as well as follow-up emails, tweets and another blog post December 31.
Uber defended its supposed supply-and- demand pricing, arguing that hotels and airlines commonly engage in demand pricing, and adding that its customer base just may have not been used to the idea in the car-service sector.
In addition to the follow-up blog post, Uber has been active making amends of sort on Twitter and pledging to customers that “we’ll do what we can to make things right.”
Perhaps one lesson to be gauged out of the mess is that sometimes transparency is not enough when you are moving in a direction that customers can’t stomach.
After all, airlines may list their bag fees on their websites, but that may not make them more palatable to passengers.
T.J Clark, the Limos.com CEO, likened the Uber scenario to customers only checking one airline site when they book flights. Clark says:
Customers who book last-minute tickets (and only check one airline) will generally pay higher prices (Uber). Whereas consumers who plan ahead and book a ticket through travel shopping sites like Orbitz and Expedia (Limos.com) will generally see significant savings.
“By offering a truly competitive marketplace where private car companies can compete for the customer’s business, Limos.com allows the transparent marketplace to set the price, as opposed to Uber’s model where they only allow you to book last minute and Uber dictates the prices — holidays and everyday.
It looks like there will be no holiday-like respite in the fisticuffs between car service companies and models as 2012 gets under way.
Dennis Schaal was North American editor for Tnooz.