What is the problem with surge pricing?

“Prime Time, also called 'surge pricing' by Uber, is where you basically don't have enough driver supply, so you have to price it high so it can send more drivers out there and also sort of suppress demand,” Lyft CEO David Risher said on the company's most recent earnings call. “That's a bad form of price raising.



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If the government limits surge pricing, then it is implicitly favoring Uber's consumers over its drivers. Whether limiting surge prices is fair involves a lot of judgment. It seems to be fair in an emergency, but may be unfair at other times, say during rush hour. Furthermore, it also depends on if you benefit.

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Since surge pricing is common in high-demand areas during prime time, finding another pickup location is a smart way to avoid it. You'd be surprised at the difference walking a few blocks can make. Moving out of the busy area could save you a good chunk of cash, and you'll probably get your ride a lot faster.

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There are times when so many people are requesting rides that there aren't enough cars on the road to help take them all. Bad weather, rush hour, and special events, for instance, may cause unusually large numbers of people to want to request a ride with Uber all at the same time.

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The bottom line: Uber's surge-pricing algorithm, which is based on supply of drivers versus demand of rides needed, resets about every five minutes, and changes based on zones that are often close together.

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But the gains mostly went to part-time drivers, who had the ability to increase the number of days they worked. Full-time drivers, with less flexibility to increase work days, ended up earning less on average than comparable drivers in a city without surge pricing.

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Avoid Busy Times and Areas One of the most obvious ways to avoid surge is simply to avoid busy times and areas. We'll start by defining when the busiest times usually occur. On the average weekday, Uber surge pricing is at its highest during rush hour — usually from 7 a.m. to 9 a.m. and 4 p.m. to 6 p.m.

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