Uber?s New Year?s Eve Surcharges Demonstrate The Harsh Reality Of Dynamic Pricing

I woke up this morning to tweets from Uber customers nationwide who felt taken for a ride, literally and figuratively, after requesting an Uber on one of the busiest nights of the year. Despite the fact the company said as such on their blog and communication channels, riders were apparently not expecting the surcharges to be so exponentially high. In exchange for providing cars on demand, Uber used their system to find equilibrium within a market where demand outstripped supply, especially a few hours before and midnight. (I?m not a frequent Uber customer, but I used them three times over my recent holiday trip, and each time was flawless; I?ll continue to use the service when I need to.) Uber?s hangover this morning is more of a harbinger for consumers in general, especially when it comes to goods and services delivered online. Uber?s ?surcharges? last night were a classic example of dynamic pricing, or adjusting the price of something relative to the demand and supply, down to the minute or second. The more data a provider has on these inputs, the more likely they are to leverage that data to extract more value from providing equilibrium between supply and demand. Most every consumer is aware of this through searching for and buying airline tickets online, where fares seem to change magically, even mid-search.

Source: http://feedproxy.google.com/~r/Techcrunch/~3/QJKv1eGYEBM/

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