Will Uber’s New Changes To Surge Pricing Help Drivers?

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Over the past few days I’ve gotten a ton of e-mails from drivers worried that Uber is getting rid of surge pricing.  Surge is a big factor in drivers’ earnings these days, and in a lot of cities it might not make financial sense to drive without it. So you could imagine why so many drivers are upset.

Officially though, Uber is transitioning to what’s known as upfront fares. Their blog post detailed the changes, but it’s a new feature on the passenger side of the app that requires the rider to input their destination and then Uber gives them an upfront estimate of their UberX trip (and also compares it to UberPool pricing).  So instead of passengers having to type in and agree to a 1.5x surge price on a $10 fare for example, the passenger will see $15 on the screen.

So the actual price passengers will pay is now more transparent, but whether the ride is surging or not isn’t as pronounced.

Uber's making changes to surge pricing, and we investigate whether this will help or hurt drivers. How will new surge pricing affect you?

Which Uber Cities Have Upfront Pricing?

Upfront pricing is currently being tested but it should be rolled out nationwide eventually.  Here are the current locations:

6 US cities: Miami, San Diego, Philadelphia, Seattle, New Jersey, New York

5 cities in India: New Delhi, Kolkata, Mumbai, Hyderabad, Chennai

If you’re in one of these cities, you may have already noticed this new upfront pricing.  But if not, you can actually test it out yourself by downloading the Uber passenger app and requesting an UberX.  I had to update my passenger app and use a GPS-spoofing app to ‘put me in that city’ in order to get it to work though. Even then, there were still a few bugs I found.

Here’s How it Looks

I was in Seattle for a wedding last week so I stumbled upon this new ‘upfront pricing’ by accident.  The request screen looks exactly the same but once you click on the arrow to set your pick-up location, the app now requires you to enter a destination and asks you how many seats you need.

If you select 1 or 2 seats, it will show a comparison of UberPool and UberX prices as seen below.  If you select 3 or 4 seats, it should display the price for a regular UberX ride ‘upfront’.  Although when I tested this part and entered 4 seats, it did not show me the price upfront.

 

Uber Upfront Pricing - Seattle

Uber Upfront Pricing – Seattle

I took a bunch of Uber rides while I was in Seattle so I got very used to this new upfront pricing and although it was pretty accurate, it’s still an estimate.  UberPool prices are still fixed but you’ll notice in the last screenshot above, that the UberX price says “& UP” which means that the trip could be more expensive.

If you run into traffic (which is a huge factor in Seattle!) or take a longer route, the fare would go up to reflect that. And unlike UberPool, the passenger is still allowed to change the destination after they make a request or while on the trip.

So if the passenger wants to make an extra stop, the driver would still get paid the extra mileage/time for that.  Or in other words, passengers and drivers are not locked into the upfront pricing like they are with UberPool.

So What About Surge?

In the past, Uber passengers were prompted with a pop-up that required them to manually type in the surge pricing amount to confirm the request.  I always thought this was an inelegant and knee-jerk reaction to all the Uber surge horror stories that come out after big nights like New Year’s Eve, but the pop-up is gone with upfront pricing.

Riders will still see a small lightning bolt on the request screen (pictured below) but they won’t be required to type in the surge amount anymore. I tested this while I was in Seattle and still found that the app required me to type in the surge amount when it was surging.  So it looks like this part of upfront pricing hasn’t been implemented just yet.

Uber New Upfront Pricing Still Shows Surge In Seattle

Uber New Upfront Pricing Still Shows Surge In Seattle

Once it is implemented though, here’s what upfront pricing ‘should look like’ when it’s surging (screenshot via Uber):

NYC-5 Explainers

You can see that the app requires passengers to enter their destination and there’s no mention of 1.5x or 2x surge pricing.  Instead, passengers will see “Fares are higher due to increased demand” but no mention of the actual multiplier.

I think this is a good thing for drivers since passengers won’t be as aware that surge pricing is in effect.  That means, they’ll be more likely to request during surge and drivers should theoretically get more surge requests.  Uber is also eliminating the surge drop notification feature so riders will no longer be able to ‘wait out the surge’.

The driver’s app will remain the same though and you’ll still be able to see surge on the map.

Why The Nudge To UberPool?

As a driver, I’m not a fan of UberPool.  We’ve shown in the past that drivers are paid about the same amount of money but have to do a lot more work on Pool rides yet the passengers save money and Uber still gets their commission. So it seems like Pool rides are great for everybody except for the drivers.

So it’s only natural that the main thing I don’t like about this new update is that Uber is clearly trying to nudge more passengers to UberPool (I’m not the only one).  By comparing the UberX price side by side to UberPool, you could imagine that more people are going to want to opt for the cheaper option.

Uber has stated that 20% of their rides globally these days are UberPool rides (although I’d assume not all of those are matched) and it seems like this update is only going to increase that number.  So although this new pricing might get drivers some more surge rides, it will also be negated by more Pool rides.

Drivers, what do you think about Uber’s new upfront pricing? Do you think it will lead to more surge and/or more Pool rides?

-Harry @ RSG

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