We had a feeling that some Uber users would wake up with a different kind of hangover on New Year’s Day. The popular private driving service, which operates in Seattle, San Fran, Boston, DC, New York, Chicago and Paris, announced a few days before the holiday that it would be implementing so-called dynamic pricing.

In other words, it planned to boost prices on New Year’s Eve as demand for the company’s private drivers rose.

But not everyone got the message, and as  you can imagine some folks weren’t pleased with paying as much as a $75 for a two minute and 16 second ride. In Seattle, the average customer typically pays $15 to $20 for a ride, and we’re reaching out to Uber to find out how much folks paid on average on New Year’s Eve.

Uber did warn customers with email messages and Tweets before the holiday, and anyone who was a candidate to pay the higher fees on New Year’s Eve got a splash screen warning him or her of the high prices.

However, not everyone saw those splash screens when they logged on to Uber’s mobile app (or perhaps they were just too wasted to pay attention). An Uber engineer explained on Quora what happened on New Year’s Eve, with a glitch causing a small percentage of riders to not see the warning about higher prices.

There were also some issues last night with the messaging that affected a tiny subset of users. My back of the envelope calculation shows a fraction of a tiny percent of users were affected (<0.01%). Two distinct race conditions cropped up as a result of unprecedented demand and supply on the system we had never seen before. These bugs occasionally lead to some people being able to request rides without seeing the dialogue about surge pricing. Obviously this is a huge problem in our eyes, and we are (literally as I type) grepping through logs to determine what users took trips when price was elevated but didn’t see the messaging. We will be dealing with these users on an individual basis to make up for this mistake.

One of the guests at a New Year’s Eve party I attended in Seattle used Uber to get to the party, but had no idea about the plans for surge pricing.

Did you use Uber to get around on New Year’s Eve? What do you make of dynamic pricing, which has been used in the airlines for years?

UPDATE: Uber said that surge pricing was in effect in Seattle on New Year’s Eve and demand was as high here as in other cities. Here’s more from the Uber team in Seattle:

For the majority of the evening on NYE we were at normal prices. We only implemented dynamic pricing when the surge of demand threatened to take up all the Ubers on the road. Most of the dynamic pricing happened after midnight when people flooded the system at the same time.

The average Uber fare is about $20 and remained at that level most of the evening. After midnight when the surge of demand hit, dynamic pricing was in effect starting at 1.25X the normal price and climbing up to 7X the normal price.

As soon as the surge of demand subsided, around 3:00 AM we lowered the prices back to our normal rates. We don’t implement dynamic pricing unless there’s a surge of demand.

Comments

  • http://www.facebook.com/profile.php?id=6005669 Christina Green

    I’m furious that the convenience based luxury towncar service I choose to use to avoid waiting more than 20 minutes for a taxi has flexible pricing the matched supply and demand!

  • Guest

    Customers who were using Uber on New Year’s Eve were most likely intoxicated and, as such, were not capable of agreeing to a legally-binding statement such as the one displayed in the Uber smartphone app. We believe that these customers shall receive refunds of the “surge” pricing that was not legally enforceable due to the customer’s disablement.

    • Peter H

      Perhaps we could get you some cheeze to go with that whine.

      By your logic, how many restaurant or bar credit card payments are invalid?

      Uber got them home safe.  They made their pricing clear.  Take some responsibility for yourself.

      • http://twitter.com/pceasy PC Easy

        Do you understand sarcasm?

      • Guest

        Peter,

        Let’s say you go to a restaurant. The prices are posted on the menu. You have a little too much cream sherry and then feel a bit nibbly.

        The server now says, under his breath, that prices are now five times higher. The jalapeño poppers are still their normal $12.75 on the menu, but you are expected whilst drunk to multiply $12.75 by 5. Most patrons can’t do this kind of arithmetic even before their first drink and yet you’re expected to.

        The bill arrives and you’ve been charged something like $66 for jalapeño poppers. The restaurant defends this practice. I don’t.

        • Peter H

          I don’t think your analogy is apt to the facts here.

          Instead, to put things in your terms — the restaurant would say “We understand you crave jalepeno peppers, but we have just one plate of that tasty dish left.  To make sure the remaining peppers are allocated to those who need to have them the most, we are charging $66 for the peppers.  Do you still want them?”

          This happens all the time in the real world with scarce commodities such as, for instance, rare wine or cigars.

          I have a feeling that those who like capitalism and the way capitalism uses price signals to deploy limited resources to where they have the highest value will like this move from Uber  (because it does exactly that).  Those who feel that individuals have mostly rights and society has mostly obligations may not.  Oh yeah I said it.

          • Guest

            Uber did not say, “Your ride will cost $100.” Uber said, “your ride will cost 5x the normal rate.” By obscuring the actual cost to a simple variable (x) and not reporting the charged cost until after the transaction is completed, Uber invites this sort of criticism.

            I apologise for my inadequate metaphor. My point is that Uber is not honest about its business dealings and that taking advantage of the disabled (e.g. intoxicated) is not an acceptable business model. Rather than using proportions and algebra, I request that Uber:

            1. Describe the cost of a ride before the ride starts, not after it has ended.

            2. Define surge pricing in number of dollars, not as a formula relative to an unspecified price.

          • Guest

            Uber did not say, “Your ride will cost $100.” Uber said, “your ride will cost 5x the normal rate.” By obscuring the actual cost to a simple variable (x) and not reporting the charged cost until after the transaction is completed, Uber invites this sort of criticism.

            I apologise for my inadequate metaphor. My point is that Uber is not honest about its business dealings and that taking advantage of the disabled (e.g. intoxicated) is not an acceptable business model. Rather than using proportions and algebra, I request that Uber:

            1. Describe the cost of a ride before the ride starts, not after it has ended.

            2. Define surge pricing in number of dollars, not as a formula relative to an unspecified price.

  • Peter H

    The transparency of this is awesome.  I understand why they raised their prices; they made it clear.  I wish all businesses had this level of transparency.

  • http://blog.sentientmonkey.com Scott Windsor

    I think what’s missing here is visibility. As a customer, I was aware of the surge pricing, but didn’t realize that it could get up to 6 times as much as the regular rates. Luckily, I didn’t need a ride on New Year’s Eve, but could understand how this could come as a shock when you need it the most. Uber’s a premium service, so I understand it’s going to be more expensive as a cab, but when I take it I usually have no idea how much it’s going to cost until the ride is over, and if I feel like I get overcharged, I have very little recourse (rating the driver, contacting CS). While the team has been great, it’s a young product with lots of potential.

    Here’s what I think Uber could do to improve it’s app/service:

    1. Allow users to specify drop-off location, and estimate price.
    2. Allow users to choose which driver they want by location and/or rating.
    3. Allow users to reserve a driver in advance for a set time/location.

    All of these I think add transparency while keeping value for customers. In the end, I want Uber to win.

  • http://www.twitter.com/michellebee Michelle Broderick

    Michelle from Uber Here: If anyone has any questions about their New Year’s Eve Uber ride please contact me, michelle AT uber Dot com. 

    We don’t turn on dynamic pricing to gather as many nickels as we can, we do it to ensure that we have enough Ubers on the road so you can always get a ride. 

    This blog post should help explain:
    http://blog.uber.com/2011/12/31/nye-surge-pricing-explained/

    We are truly committed to customer service and want to hear from our clients. Reach out, I’m always available to help. 

  • Anon

    We used Über to get downtown from Queen Anne around 7:30pm on New Year’s Eve. $25. Prompt service. No complaints at all.

  • Guest

    Feel free to update the article to say “up to 7.75x regular rates”. I unknowingly paid $208 for a 4.78 mile ride home. I understand surge pricing and expected it to be high, but certainly not that expensive. Clearly never would have taken this option when cabs were readily available in the area.

    • http://twitter.com/MichelleBee Michelle Broderick

      If you feel like this was in error, feel free to reach out to me. michelle AT uber DOT com. 

  • RM

    I sent my concerns about my charge on NYE to Uber’s customer service and we arrived at an agreeable compromise.

  • Guest

    I had a great NYE experience with Uber. At 9PM I got a busy signal when trying to call any of the Seattle cab companies. Jumped onto Uber, requested a car and 7 minutes later it arrived. I paid $17 and didn’t get the 6.25x raise in rate. If the price had been $106 I would have been really upset.

  • Guest

    I was charged 7.25x the normal rate – more than the 7x they are admitting to charging – and was NEVER shown the agreement on the ap as Uber insists I was.  I am taking this up with them and want those Surcharge fees back.

  • Mack

    Yep. I just woke up. Checked my email.

    $86 DOLLARS!?

    Well, Happy Fucking New Year to you too Uber.

    I did get home safely and now I am awake enough to go back to work, to make make back the money I so drunkenly flushed down the toilet last night. I should at least get a gift card for being so patient. I remember thinking… “surcharge of 3.75? SURE! That’s nothin!” Hahahah.

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