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Uber To stimulate Demand in January by Cutting Prices

January 9, 2016 - Written By Daniel Fuller

Uber is already a fairly cost-effective service compared to a normal taxi, and is set to become even more affordable with the rollout of self-driving services. Uber’s price is just one of many reasons, including their wide availability, that they are currently among the top players in the unowned personal transport field. Every January, however, they and just about every other service face a downturn. Andrew MacDonald, manager of more than a few Uber territories, explains in brief. “It goes from being one of our busiest periods of the year to the slowest…” When potential riders are all spent from the holidays and have less reason to leave their house, they’re less willing to spend on transport. For services like Uber, this can be a big problem. A problem that MacDonald says can be remedied through price cuts. “The best way to stimulate demand is through price cuts. And this works.”

The cuts will only come in certain key areas where it will be a win-win for Uber drivers and riders, mostly areas like Wichita, Kansas and and the majority of New Jersey that experience drastic drops in demand. In cities that just can’t really be helped, Uber will be providing drivers with an hourly guaranteed wage and incentives. Meanwhile, areas like New York and Boston, where demand never seems to wane or prices are already low, the drops will be nowhere to be found. Price cuts in these markets wouldn’t just affect Uber’s bottom line, they would hurt drivers. Uber driving isn’t the highest-paying job out there, despite being able to generate decent sums of cash in some markets, for savvy and talented drivers. Percentages from cuts will be tweaked from the last round to optimize the profit margin and find something that works for riders and drivers.

80 markets in the United States and Canada will see lower rates roll out this weekend, with 20 more cities planned for later in the month and into winter in general. Higher-ups will be watching the profits and number of riders in various cities to continue tweaking the price cuts to perfection year on year.