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
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******* The email from Uber *******
- You will be able to estimate the fare prior to requesting a ride (iPhone only).
- All riders will need to accept the fare multiplier before finalizing a booking.
- When multiples get really high, we have our own sobriety test.
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