Uber shows how not to price services. How they can easily fix their pricing model.

Uber Had A Very Bad Day On a backdrop of tragedy, prices were unilaterally increased. Yes “surge” pricing is based on supply and demand, but implemented poorly.

  • From the image, the scope of the change is unknowable. This increases uncertainty.
  • Its unilateral. Nobody likes it when options are removed.
  • Uber does not present this as a profit opportunity for risk tolerant drivers.
  • In fine print, the rate expires in 2 minutes. What does that mean? The rate will go higher, or lower?

This is fallout from not showing supply AND demand AND letting people choose.

If Uber had a map showing the supply and demand near the tragedy, everyone would understand that the tragedy is causing higher prices, not Uber. If someone thinks a price is too high, that is not a problem, its an opportunity! They can’t complain anymore: If they don’t like the price, great, offer a lower one. There will be people who are fine with the risk of getting closer to the tragedy. Plus, people could say they are willing to pick up a short walk away.

The goal of the free market is to complete a win-win transaction. That’s hard without full transparency.

This PR issue also illustrates the symptoms of:

  • Fiat decisions verses evolutionary decisions. Uber first charges double, then reverses the fees. All this takes overhead and decisions making.
  • Uber is billed as peer 2 peer, but obviously is not.
    • There is very little focus on supply, mainly on demand.
    • Participants don’t set prices.
    • Their driver verification process has critics. (But a few instances of violence is pretty small compared to the number of rides. It might be statistically safer to ride Uber than to walk.)
    • The presence of God view. This overhead is not needed with true peer to peer.

If Uber used a free market pricing model, they would make less money, but provide a better priced service.

0 – 1.6 mins talking about the above info.
1.6 – 4.6 mins a visual suggestion.

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