The “Surge Pricing” Model in Uber

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I understand the “Surge Pricing” model that Uber uses and, I also think that it is an appropriate way to meet supply with demand through their particular service driven business model but, there are unethical holes within this model that I believe Uber needs to sew up, so to alleviate customer concern with regard to price gouging. Nobody likes to be taken advantage of, or, to even feel like they have been taken advantage of, which, is precisely how customers felt during Hurricane Sandy and the hostage siege that occurred at the Lindt chocolate Shop in Sydney Australia where prices rose to “four times” (Weiner) the standard fare. Here, lays Ubers “unethical holes” that are in dire need of suturing. Even though Ubers Surge Pricing model is appropriate for their service driven business, there remains gross opportunity for unethical behavior by Uber drivers, such as in the case of the alleged “Uber driver who published a video online demonstrating how to manipulate the Surge Pricing model by accepting and canceling rides.” (Phillips) Uber claims to “monitor every driver and such unethical behavior would only bring scrutiny from Uber to the driver.” (Phillips) Yet, one wonders how Uber can appropriately monitor all its employees and even if they could, could they do so successfully; it seems that Uber’s leadership isn’t too concerned with follow through as there has been no public comment from Uber (Phillips) about their employee who posted the video demonstrating how to manipulate the Uber’s app for profit. Yet, the question remains, can Uber properly monitor all its drivers and ensure ethical fare for its customers even when the Surge Pricing model itself is prone to ethical fallacies because an algorithm (Weiner) is incapable of ethical decisions. This is where Uber’s leaders need to step and get to work, so, they can prevent incidents like what happened during Hurricane Sandy and the Lindt Chocolate Shop hostage situation. The Surge Pricing seems appropriate to meet supply with demand, but it needs some ethical guidance from Uber itself to truly meet customer’s needs in my opinion. Question 2: The main pros of the Surge Pricing model are Uber’s ability to adequately meet demand with supply in the peak times of request for Uber’s services, which drives up profit margins for Uber itself. This further translates to a positive for Uber’s drivers, as their profit margin dramatically increases when the cost of Uber’s service rises. One further positive Surge Pricing brings to Uber’s drivers is their ability to charge more when there is a demand for services during holidays, late nights and sketchy weather, such as snowy conditions because “in 2015, Uber ‘began dropping prices to beat the competition and generate demand,’ which lowered drivers’ base rate of pay.” (Phillips) Where I am currently employed, we are paid time, and a half during weekend shifts, double time on Sundays and, double time and a half during holidays, so, there should be no reason Uber should fall under scrutiny, or, its drivers for charging more for its services when demand requires drivers to operate during off-shift hours, holidays and in unfavorable weather conditions to meet supply. The increase in profit that Surge Pricing brings to Uber’s drivers translates into a positive for Uber’s passengers, if they are willing to pay and desperate for a ride” (Phillips) The public benefits as potential drunk drivers are kept off the road through Uber’s services; “Mothers Against Drunk Driving (MADD) created a partnership with Uber via #UberMADD on Twitter to get drunk drivers of the road during certain holidays that experience high levels of drunk driving.” (Weiner) Dealing with drunk passengers alone deserves a higher rate of pay in my opinion; Uber should standardize pricing for the inebriated to help offset the psychological trauma of their drivers.

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What about the negatives of Surge Pricing? The Surge Pricing model’s greatest negative is the absence of a “price ceiling,” i.e., a monetary limit a business can charge, if, or when a business uses the Surge Pricing model. I think the “price ceiling” is even more crucial for businesses that provide services such as Uber, as there is a greater tendency for service-oriented businesses to run into ethical dilemmas as Uber did during the hostage situation at the Lindt chocolate factory in Australia and, Hurricane Sandy (Weiner) here in the states. Another negative of Surge Pricing, as it pertains to Uber, is the “gross” criticism that came from those who were “outraged when Uber quadrupled the fare for rides from the Lindt chocolate shop that was under siege, believing that it was immoral for the company to profit from the distress of others; similar disdain came from rising prices during Hurricane Sandy.”( Weiner) These unethical dilemmas plant seeds of distrust within the minds of customers, especially when Uber’s leadership seems less concerned with their customers and more concerned with dodging responsibility for unethical practices. “Uber sort of apologized” for the surge in prices during the “Sydney hostage siege, saying that its algorithm automatically sets a surge price when demand peaks, and gave people in this zone a free ride out (Uber paid the drivers the surge fee).” (Weiner) Uber, their customers and, the public all benefit from the Surge pricing model in some way, whether that be employment, profits, or, public safety. Yet, they all experience the negative side of the Surge Pricing model too. Whether that be Uber’s customers, from being objectified during times of crisis (whether intentional or not) and Uber themselves for “sort of apologizing” and coming across not only unethical but downright greedy; no matter how high the demand, some prices will always seem unreasonable and out-and-out insulting. If such behavior from Uber continues, the final negative effect will land in the lap of the public, as, Uber’s most positive consequence of their services, i.e., helping to create safer roads by removing drunk drivers, will fade into Uber’s self-inflicted demise. The benefit of the Surge Pricing model is felt by all, along with the hurt.

Works Cited

  1. Phillips, Abby. “No, Uber Drivers Can’t Game the ‘Surge Pricing’ System the Way One Driver Claims.” The Washington Post, WP Company, 19 May 2015, www.washingtonpost.com/blogs/the-switch/wp/2015/05/19/no-uber-drivers-cant-game-the-surge-pricing-system-the-way-one-driver-claims/.
  2. Weiner, Joann. “Is Uber’s Surge Pricing Fair?” The Washington Post, WP Company, 22 Dec. 2014, www.washingtonpost.com/blogs/she-the-people/wp/2014/12/22/is-ubers-surge-pricing-fair/.
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The "Surge Pricing" model in Uber. (2019, Dec 24). Retrieved November 30, 2022 , from
https://studydriver.com/the-surge-pricing-model-in-uber/

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