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The majority of UberX’s trips are priced on mileage, time and general demand in the area, but some guinea pigs in areas with its carpooling service UberPOOL have found they are being charged more for specific routes.
Uber has confirmed this silent test, dubbed ‘route-based pricing’, claiming that it’s separating time-sensitive users (those who use UberX) and price-sensitive users (UberPOOL riders). Whereas the former willingly choose to pay higher rates for private rides directly to their destination, the latter are more concerned with cheaper fare.
The company sees this as a potential money-maker, as it seeks to bring in revenue after 2016’s more than US$2.8-billion loss. But, as with most Uber stories, it’s not without its controversy.
Drivers have been reporting that they are not seeing a boost in earnings, despite riders paying more. Daniel Graf, Uber’s VP of growth, has confirmed and defended the fact.
Uber’s silently testing ‘route-based pricing’ which charges users more based on the popularity of the journey
Graf claims that the extra revenue is used to offer riders discounts without denting drivers’ incomes. In essence, when a rider takes a high-demand route and pays US$12, the driver will only make money off the standard US$10 they would have paid. But when Uber offers a discounted ride at US$8, the driver will still be paid as if they were charged US$10.
What Uber is looking for for its drivers, Graf claims, is consistency. If drivers don’t earn a reliable and consistent income, the company is afraid they may leave.
But this isn’t the only backlash high-demand routing has received.
Some reports have claimed that Uber is targeting wealthy riders and using machine learning to determine what they would be willing to pay. It’s also been suggested that high-demand routes is code for “travelling between wealthy areas”.
In a statement to Android Headlines, Uber ambiguously confirmed the allegation.
“We price routes differently based on our understanding of riders’ choices so we can serve more people in more places at fares they can afford,” it said.
But Graf vehemently denied it.
“Absolutely not,” he told Bloomberg. “This is not personalized. This has nothing to do with the individual.”
There is currently no confirmation in which cities it’s operating, or whether riders should expect it in their hometowns any time soon.