Uber is undoubtedly one of the most popular transport enablers on international or national tech platforms. The company leverages technologies such as GPS positioning software, mobile and internet communications, accounting software, etc. to generate state of the art solutions to satisfy urban commuting needs.
One of Uber’s greatest challenges in recent years has been the criticism it received for its pricing policy.
The company facilitates transparent cash payments as well as safe and reliable digital transactions.
However, the fares and rates charged by Uber have attracted controversy due to the rules pertaining to surge pricing and fare estimation calculations or equations.
Uber Pricing System
Uber’s popularity can be traced back to its wide range of services, attractive Apps, and powerful tech-enabled features such as ride tracking, trip history, and payment modes. The pricing system of Uber has the following list of relevant factors –
- The low-cost options include UberX and UberXL, and these rides can also be shared with 4 to 6 other passengers.
- The BLACK, SUV, and LUX category of services are expensive as they ensure luxury and comfort even for a single individual who prefers a solo or couple ride.
- A ride in XL cars costs 50% more than the basic UberX service, while SUV rides can save the customer anywhere between 25% to 50% as compared to UberBLACK ride.
- The Uber App has an in-built feature known as the price calculator or fare estimator, which gives a fairly good idea about the cost to be incurred by the rider.
- The company has a unique pricing formula that has both fixed and variable costs, and it uses this equation to do justice to the company, partner-drivers, and riders.
- Cash and card payments are permitted, and other monetary aspects include tips, referral incentives, discount offers, and fare splitting options.
- There are different types of digital payment modes including credit and debit cards, and the passengers can benefit through membership rewards, gift vouchers, promo codes, and points/credit system.
Price Estimation & Clear Per Person Doubts
Uber pricing policy or system of calculation has many technical and financial elements, and customers have to be familiar with all of them.
- Pricing System
Uber, since its inception, has followed a dynamic pricing system comprising of base fare, per-minute-charge, per-mile-charge, minimum rates, and cancellation fee.
The fare is dynamic because both fixed and variable costs change from one city to another, or even from one area to another within the same city.
- Fare Estimation
The fare estimate calculator of Uber App generates an approximate amount on the basis of price point, location, distance to be covered from pick up to destination, and current traffic conditions in the city or area.
- Flat Fares
A new offer that has activation fee and it can be availed for 10 to 40 trips in specific categories such as UberPOOL and UberX rides.
- Surge Pricing
The traffic is very heavy during the weekend evenings, or rush hours of working days, and Uber has to enthuse the driver.
Surge pricing is a temporary fare hike during busy hours and it depends on the local demand for a ride and number of drivers who are free at that particular moment.
The company’s surcharge can go 100% beyond base rate, and it passes on some of the fare to the drivers who show willingness during testing times.
- Sharing Costs
Whether a rider hails the Uber car for a solo ride or a shared ride, Uber does not charge per passenger or person.
The above-mentioned fare estimation and pricing system makes this clear, and additional increase or surge is primarily to generate driver demand in busy hours.
The riders who share the Uber trip can however split the costs between them, or tag along a friend or friends to split the fare and thus save transport costs for themselves.