A question many will ask.
“What exactly is Uber Surge pricing?”
Well, It’s something I absolutely love as a driver, but would hate as a passenger.
Although, in some senses, Surge pricing is what helps keep Uber’s fares so much lower than their main competitor the Taxi Company.
But, I’ll explain all of that below. So, read on…
Uber’s Explanation Of Surge Pricing
“Uber rates increase to ensure reliability when demand cannot be met by the number of drivers on the road.
Our goal is to be as reliable as possible in connecting you with a driver whenever you need one. At times of high demand, the number of drivers we can connect you with becomes limited. As a result, prices increase to encourage more drivers to become available.
We take notifying you of the current pricing seriously. To that end, you’ll see a notification screen in your app whenever there is surge pricing. You’ll have to accept those higher rates before we connect you to a driver.”
My Explanation Of Surge Pricing
It’s pretty simple actually. Uber bases there pricing on supply & demand. A concept that’s been around forever. When there’s more people requesting rides than actual drivers on the road, the price goes up because the demand (ride requests) is greater than the supply (drivers).
When there’s more drivers on the road than ride requests, the price will be at it’s lowest point (the normal fare) because now the supply (drivers) exceeds the demand (ride requests).
How Uber Surge Pricing Works
As a driver, you will see the surge color coded in the Uber Partner App.
Yellow= The area is starting to get busy Orange= The area has become pretty busy, but not quite surging yet. Red= This means the area is extremely busy and Surge pricing has been put into effect. Uber divides each area into separate cities and neighborhoods. So, while it could be surging in the Mission District of San Francisco, The SOMA district might not be surging at all.
Update 2/25/2017: Uber has changed their surge pricing maps. The color of a surge ranges from a light orange(1.2x fares) to a blood red(3x fares and higher).
New Years is one of the busiest days of the year and surging actually became 9.8x the original fare! I’ll admit I didn’t get a request for a ride until the surge went down to 3.8X, but I know there were some people that did get some of those higher surging rides.
When you zoom in on a surge you will be able to see the multiplier. While the picture above shows a lot of red, which means high surging, you can see in the picture below the 9.8x surging multiplier that I was talking about.
How Surge Pricing Is Calculated
Once an area becomes red you will see a multiplier in the red highlighted area. I’ve seen an area show anywhere from a 1.1x multiplier to a 7.0x multiplier, but It can technically rise higher if the demand is great enough.
For example, if you see an area highlighted in red surging with a 2.2x multiplier, the fare will now be 2.2x the normal price for requesting an Uber ride.
So, if the normal fare is $15 for the ride, you would do;
$15 (normal fare) x 2.2 (Surge price multiplier) = $33 as the surge priced fare.
This is great for drivers because this will mean you will get 2.2x the original amount of money you would’ve received for the trip had it not been surging when you picked up the passenger.
Uber takes between 20-30% of the fare and you get the rest. This will not change even during Surge Pricing.
Even though the customer is paying more, it’s technically a win-win-win situation.
Uber makes more money, you make more money, and the rider will still get their ride typically within minutes.
How To Avoid Surge Pricing As A Passenger
Uber goes out of their way to make sure you are aware of the prices being higher even though they really don’t have too.
When you login to the app to request a ride a big notification will pop up telling you that it’s surging and Uber will even make you type in the multiplier so you are aware and agree to the higher prices.
Update: Uber now tells you “Fares are slightly higher due to increased demand” just like the above screenshot.
After you agree, Uber will even give you an estimate of what the cost will be providing you put in your destination. If you don’t add your destination Uber won’t be able to calculate what your price will be because they won’t know where you are going.
Of course, if you don’t want to pay extra, I totally understand. The economy has been tough on a lot of people, and we’re all trying to save dollars where it’s possible.
To Avoid The Higher Prices You Can;
- Wait until the surge is over, Uber even gives you the option for them to send you a text when the surge is over.
- Check other ride sharing services like Lyft, for example.
- Call a taxi, take the subway, walk, or even have a friend pick you up.
Uber is not your only option of transportation and you should never feel it is. So, if the price is too high, instead of taking the ride and complaining on social media later how you got ripped off even though you agreed to the price. Just find another means of transportation. It’s that simple.
And as far as the complaining goes, I do want to shed some light on surge pricing even though you might get upset about it.
As a driver, I’m trying to make ends meet just like everybody else in the world.
Surging is what helps me make enough to live. For example, if you requests a ride and it only costs you $5 for the trip, which is the minimum in San Francisco.
I’ll make $3.50 out of that $5. So, if it takes me 10 minutes to come pick you up, I usually wait 5 minutes for the rider to get in my car, and then it takes another 5 minutes to bring you down the road.
I would have spent 20 minutes of my time and only gotten $3.50 which equates to $10.50 an hour plus I still have to pay for gas, maintenance, and taxes. That would mean I’m making less than minimum wage, because most people don’t tip since Uber discourages it.
But, with the surge pricing I am able to make up for it and average out to about $20 an hour instead of the $10.50.
The up-charge in price when it’s busy is what allows Uber to charge such low fares most of the time.
If there wasn’t surge pricing Uber would have to make their base fares higher which means you would be paying more in the long run if you are using Uber more than once.
So, hopefully the next time you see it surging 2x or 2.5x, understand that you are helping the community by allowing Uber drivers to make more money so they can afford to pay their bills as well.
If not, then you won’t have as a reliable transportation from Uber because people would stop driving because they aren’t making enough money.
Surge pricing is what allows ride sharing services to exist and work efficiently.
Best Practices For Uber Surge Pricing As A Driver
I hear a lot about new drivers complaining that every time they see a surge and drive to the area the surge is gone by the time they get there. Honestly, this is a mistake and something a lot of the new drivers, especially, need to be made aware of.
The surges for an area can change every few minutes because it’s based on supply and demand. So, it’s one thing if you’re 2 minutes out of the surge area and it’s another thing if you have to drive across town to get to the busiest area.
My tip for you is to never chase surge pricing. When you are new, you won’t know how the demand is in the area. You need to do a lot of driving in the beginning to learn about all the hot-spots so you can be in a greater position to make more money.
You will naturally, as you drive more, see which areas are constantly busier so you know where to start the next time you decide to go online.
In my opinion, you are just losing money if you are constantly chasing surges that constantly change themselves. Trust me, I’ve done it too. I’ve had my fair share of chasing those higher prices because I want to make more money. I think most people have that drive.
Just don’t do it. Wait to see the hot-spots and then create a strategy of when you want to drive to capitalize and make the most money.
Busiest Times To Drive
I’m a night owl. I can never seem to fall asleep until I see the sunrise. Maybe that makes me a vampire, but anyways… The best days to drive would always be on the weekend.
I would say Thursday-Sunday would be the busiest for Uber. Saturday has always been my best day, so if there was a day to try out Uber it would probably be that day.
As far as time. I always liked driving when the bars are closing. You have a ton of drunk people all going home at the same time, and none of them are capable of driving themselves home.
Hence this is why I feel from maybe 10pm- 3am is the best time to drive. I like to give an hour after the bars close so that everyone had enough time to make it home.
Other good times to drive would be early in the morning during the work commute, and rush hour in the evening when it’s time for everyone to come home.
Every area is different, and it also depends on what kind of events are going on in the city as well as if it’s a holiday. For example, if there’s a Kid Rock concert going on, you know there will be a lot of people in one area with many needing a ride home.
Same thing goes for holidays. From my understanding the night before Thanksgiving is basically the drunk people’s holiday. Families in town and everybody gets a drink before the big feast the next day.
That night I only worked an hour and half because I had my own festivities going on, but in the hour and a half I made $120. Not bad for a Wednesday(;
While I know as a passenger higher prices can suck, I hope this post helped enlighten you about why Uber’s surge pricing is needed and how it benefits us all.
If you are somebody looking to become an Uber driver, and not sure how, then just check out my in depth guide on how to become an Uber driver.
Question and concerns, please leave comments below.