Uber Tests New Price Structure for Mobile Payments Ridesharing Users
Convenience commonly comes with a cost; it’s important to a lot of people and it makes an excellent way to distinguish a firm in the market, so of course there’s a little extra money to be made for offering convenience. Does it work both ways, however? Is the less convenient option also the less costly? That’s a point that Uber’s looking to test out with a new pricing scheme currently in the works.
Essentially, Uber’s offering discounted fares for those willing to trade a wait for a discount. Early testing with Uber employees showed the feature in action, as an Uber employee attempted to set up a ride. The employee was then offered the option to either leave “now”—“now” being defined as “4:56 pm local time”—or wait until 5:00 pm. The 4:56 ride would have cost $10.18, but the 5:00 ride dropped just over $2 to $8.15.
Right now, the option is being tested internally, and only in San Francisco and Los Angeles. An Uber rep told Quartz: “Affordability is a top reason riders choose shared rides, and we’re internally experimenting with a way to save money in exchange for a later pickup.”
Uber has been experimenting with its pricing structure for some time now; summer 2016 saw a shift to “upfront pricing,” a move that let Uber charge riders one price then pay the drivers based on a different price, a process that, when analyzed, worked out in Uber’s favor, as found by a 2017 study by The Rideshare Guy, a driver blog.
Uber has to walk a fine line here; if it cuts the prices too hard to riders, it can’t pay drivers much at all, and that will make drivers look to jump ship. If the drivers are well-compensated, it opens up opportunity for other ride-sharing firms to get involved. It’s done a good job so far of straddling that line, and innovations like this may continue to help, especially if it can keep costs low to allow for profitability.
The idea of saving 20 – 25 percent for a wait of five minutes or less sounds like a good plan, but it will have to be sustainable to get the company anywhere.