Uber is charging some riders more for high demand routes

  • Uber charges riders based on distance, time and demand.
  • It tested route-based pricing, where riders pay more for popular routes, in 14 cities last year
  • The difference in prices will go to Uber, which uses it to lower other ride prices
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    Uber has been charging some passengers differently based on the routes that they're taking, according to a pair of reports in Bloomberg and Business Insider. The goal of the pricing scheme is to help entice drivers in those areas to help reduce wait times for passengers.

    Traditionally, Uber has charged riders based on the mileage, time on the road, and surrounding demand. Last year, the company has been testing a route-based pricing with its UberX service in 14 cities that also use UberPool, in which it charged customers more for high-demand routes. Bloomberg spoke with Uber executives, who said that the company is using machine learning to figure out when riders are willing to pay more for their ride in certain areas.

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    However, drivers for those high-demand routes won't see an increase in pay. The difference between those increased fares and the driver's pay goes to Uber, which in turn uses it to pay for promotions, "such as dropping the price of an UberPool route from $10 to $8," according to Business Insider. "Instead of drivers making less on the $8 fare cut, Uber will still pay them based on the $10 fare." The company stressed in a statement to Android Headlines that riders will still know how much they're being charged.

    Last year, Uber introduced an upfront pricing model designed to remove some of the uncertainty around surge pricing during periods of high demand, while at the same time, Uber drivers have noticed and complained about the gap between their pay and what their passengers are paying in fares. Speaking to Business Insider, Daniel Graf, Uber's head of product, noted that one of the goals is to provide drivers with "consistent earnings," saying that without them, drivers will go elsewhere. Essentially: some riders will pay more, but the excess will be used to try and reduce fares in the area.

    The pricing change comes at a precarious time for the ride-share company. While the company continued to grew in 2016, it lost nearly $3 billion. It also faced numerous problems, such as allegations of sexual harassment and toxic working conditions, that it stole trade secrets from Waymo, and that it tried to hide its activities from regulators and other tech companies.