Ride or Die

Uber Reverts Back to Surge Pricing in New York After One Day

"Footing the bill for higher driver costs came at a significant expense to Uber with over $100,000 in additional payments."
newsurge 3 Uber Reverts Back to Surge Pricing in New York After One Day

(Photo: Uber Blog)

With most subway lines suspended or running on limited service, getting around New York has been nothing short of nightmarish. Yesterday, amid cries of price gouging, San Francisco-based Uber (which allows users to hail a black car from their phone) decided to postpone “surge pricing” in the wake of Hurricane Sandy. The company decided to turn off surge pricing for customers, but to still pay drivers surge pricing in order to incentivize them to get out there and provide rides to stranded New Yorkers.

Now, in an email sent out to Uber NYC users, the company claims that just one day of this pricing structure has resulted in a $100,000 loss to the company, “something we can’t continue indefinitely without breaking the bank.”

According to Crunchbase, the company has raised $49.5 million in venture funding.

In an email, the Uber NYC Team, including general manager Josh Mohrer writes:

So while we were mostly able to avoid higher prices the day after Sandy, the reality is that under this week’s extreme conditions, raising the price is the only sustainable way to maximize the number of rides and minimize the number of people stranded – by providing a meaningful incentive for drivers to come out in undesirable conditions.

Later this morning we will be reverting back to standard Surge Pricing for riders. It is a hard decision, but one we feel strongly about. Without raising the price, there will be less than ½ the number of drivers on the system with several times more demand on far fewer drivers. Without Surge Pricing, Uber would become essentially unusable this week. For those needing a ride this week, it’s going to be expensive; there will be a clear pricing notification in the app at the time of request. During this emergency price increase, Uber will waive all of its own fees with 100% of the fare going directly to the drivers helping New Yorkers move around the city.

Surge pricing, Uber argues, “helps maximize the number of Uber cars on the system during times of extreme demand, maximizing the chance that there will be a car available when you need one.” But New Yorkers are already upset that Uber’s goodwill extended only one day following Hurricane Sandy.

screen shot 2012 11 01 at 10 05 20 am Uber Reverts Back to Surge Pricing in New York After One Day

screen shot 2012 11 01 at 10 05 58 am Uber Reverts Back to Surge Pricing in New York After One DayWe’ve reached out to Uber for comment and will update when we hear back.

Update 7:35 p.m.:

A tipster who wished to remain anonymous wrote in:

I am a NYC resident and tried to get to work yesterday in the aftermath of Sandy. I booked an Uber car, as there was NO other transportation available in my area. The previous week, I had been sent an email from Uber saying that they were giving me a credit of $40 because I had not used their service in a while…I thought fine…even IF they are charging more because of limited supply, there is no way my 5 mile ride from Harlem to midtown (normally about 15-20 in a yellow cab) will be more than $40-$50. The more important thing was that I got to my office to access if there was any damage, power loss, etc. (I was the only person of the 4 person team able to get to the office). Yes, we sat in awful traffic but the entire city is at a standstill. Imagine my SHOCK when I get to my email and get a charge for almost $180!! I’ve sent the below email to Uber requesting a call to dispute this and have not heard from them….I am beyond upset that this new, innovative company I was so excited about would try to profit off of the tragedy we have here in NYC. I am hoping that they will do the right thing, and charge me an appropriate fare.

The tipster also attached a receipt for the trip. It took 1 hour and 22 minutes to go 5.43 miles. The price breakdown was:

Base Fare $7.00
Distance $10.03
Time $71.38
Surge x2.0 $88.41
Charge subtotal $176.82

The surge pricing cost our tipster almost $89 more than a typical fare ride would have.

Have you taken Uber since Hurricane Sandy? Let us know what it was like and how much it cost: tips@betabeat.com.

Follow Jessica Roy on Twitter or via RSS. jroy@observer.com