Hey Uber – Great Job Managing Price Expectations

A year ago New Year’s Eve (2011), Uber had a PR problem.  They were accused of gouging their customers.  For example, one user paid $77 for a 3 mile, 15 minute ride in San Francisco at 1:10 am, peak taxi time.  This is much more expensive than usual.

They weren’t doing anything underhanded or nefarious, it is just the way their business model works.  However, their users didn’t expect these huge fees so Uber got a big black eye.

Fast forward to New Years Eve 2012.  This time Uber carefully managed the price expectations of their customers.  They sent an email (below) to their past users explaining what to expect in terms of pricing.  Uber changed their mobile interface to make it very clear that the prices are higher than normal before someone ordered their service.  They even added a “sobriety test” that goes into effect when prices reach 5 times normal.  (Appropriate for New Years Eve).

The result?  A January 5 search on Google news for “Uber” found no articles of people complaining about being gouged.   What a change from a year ago.

We should all learn from this situation. Although Uber may be an extreme case, we all should manage our customers’ expectations of our prices.  If they learn to expect a certain price and are shocked with a much higher one, this will cause negative reactions.  On a smaller scale, they may also rebel if they learn to expect they can always buy on discount but then the discounts go away.

What are your customers’ price expectations?  How did they get them?  What can you do to manage them better. Learn from Uber.

 

Mark Stiving, Ph.D. – Pricing Expert, Speaker, Author

To gain more insights on pricing sign up for the Pricing Perspective for a free monthly summary of Mark’s blogs and other publications.

 

*******  The email from Uber *******

Happy New Year’s!
Hey Mark,
New Year’s Eve is upon us, and we’re getting a ton of questions about how to plan Uber into your evening. It’s going to be a crazy night and Ubers are going to be pricey, so here are a few pointers to keep in mind:
Surge pricing
Surge pricing is in effect for New Year’s Eve. The price will increase in order to maximize the number of cars on the road during peak times – and automatically decrease when there are enough cars on the road. We do this to make sure Uber is always a reliable ride, even during New Year’s! For more on surge pricing, please see our Q&A.
No Surprises
So that there are no surprises, we’ve worked hard to provide clear price notifications when surge pricing is in effect.
  1. You will be able to estimate the fare prior to requesting a ride (iPhone only).
  2. All riders will need to accept the fare multiplier before finalizing a booking.
  3. When multiples get really high, we have our own sobriety test.
Buckle your seatbelts
NYE pricing is not for the faint of heart. The average surge multiple will be about 2x normal prices, during the worst times (12:30 AM until 2:45 AM), but prices during extreme spikes could cost you $100 MINIMUM before time and mileage charges! These are limos, people, so be careful with those Uber ride requests: Uber rides will be reliable on New Year’s Eve, but they’ll also be pretty pricey.
The best times to Uber
The most expensive times to take an Uber are 8:30pm – 9:45pm and 12:30am – 2:45am. The best times to take an Uber on NYE are before 7pm, 10pm – 12:10am and 3am onward.

Have questions?
To support the surge pricing Q&A on our blog, we’ll be doing a live chat on Monday at 10:30am PST. Contribute your questions here and join live at Uber.com/NYE

Wishing the best for you and yours in this coming year!

-The Uber Team