How much is your New Year’s worth?
If you’re taking an Uber, be sure to add couple hundred dollars to that price.
Uber spelled out its plans for surge pricing on New Year’s Eve during a call with reporters Monday morning. The uptake: Uber will be jacking up prices, a lot, and they say it’s not their fault if a passenger wakes up New Year’s morning with an Uber credit card receipt equal to a monthly car payment. Passengers have to agree to surge pricing before they get in the car. So folks, read your app.
Passengers are alerted to the price increase when they order an Uber, and before an order can be confirmed, passengers must agree to it by typing in the app the amount of the surge, a spokeswoman said. If a passenger doesn’t want to pay prime-time pricing, they can sign up for a text alert that will notify them when surge pricing has ended.
Which will be long after the champagne toast and rounds of Auld Lang Syne. Uber expects to have the most demand between 12:30 a.m. and 2:30 a.m., when the party animals will start making their way home. If you want to save money, take an Uber before 8 a.m., between 10 p.m. and midnight, or after 3 a.m.
There is no cap on Uber’s surge pricing, but a minimum of four- or five-times the normal rate would be a fair expectation. Lyft will cap its fares at 400 percent above the normal rate, and a spokeswoman said Monday that at that price the service “will still be less than other platforms.” Uber prices were 3.8 times the normal fare on the Thursday morning of the powerful rainstorm two weeks ago.
Prices on the Uber and Lyft app are determined by a price algorithm, which calculates fares based on demand. The more calls for rides, the more fares go up. The companies say the higher rates are designed to encourage more drivers to get out and drive, and meet customer demand. Some call it the beauty of capitalism, some call it On New Year’s Eve 2013, Twitter users tweeted ride prices ranged from a 4.85 mile ride in Pennsylvania that cost $265 to a 59.13 mile ride in Texas that totaled $731.
Uber said it expects more than 2 million passengers will use its app on New Year’s Eve, and some have estimated the company will make $100 million in revenue on Wednesday night alone. Last year, Uber made an estimated $10.7 million from about 200,000 rides. About $893,000 came from riders in San Francisco, the second–most revenue-generating city on the West Coast, after Los Angeles, according to a breakdown by Business Insider.
Want to avoid surge pricing? There’s always Sidecar, the car-app service that has been overshadowed by Lyft and Uber. The app is a marketplace, where drivers set their own prices and passengers can choose which price they are comfortable with. The passenger knows the full price before getting into the car — not just the percentage of the surcharge.
“Since the market dictates the price, you can be assured its fair and won’t skyrocket just because it gets busy,” said spokeswoman Margaret Ryan.
The good news for passengers? Even if you do get slapped with an astronomical fare for a ride, know that you’re also helping out a good cause. For every ride taken, Uber will each donate $1 to Mothers Against Drunk Driving when passengers enter the promo code MADDNYE. Lyft is offering to give $1 to the organization for each person — up to $10,000 – that makes a “pledge” not to drive drunk.
Image courtesy Uber
