Update: Uber has reached out to us with the following statement
“We price routes differently based on our understanding of riders’ choices so we can serve more people in more places at fares they can afford. Riders will always know the cost of a trip before requesting a ride, and drivers will earn consistently for the work they perform with full transparency into what a rider pays and what Uber makes on every trip”
End of update.
“Route-based pricing” is probably a term many Uber riders are familiar with, with the assumption being that depending on certain factors, the cost of an Uber, on any particular route, may vary. However, what might not be so clear is that Uber is reportedly using the rider as one of those variables, according to a new report out of Bloomberg. The confirmation of this person-variable pricing is said to have come directly from Uber as they look to further provide clarification on how much the company makes per ride, compared to how much drivers are paid for that same ride. An aspect which is already contentious from the driver point-of-view. In either case, what Uber reportedly explained is that machine learning technologies are used to essentially predict what a rider might be willing to pay, and then the rider is charged that amount.
To be clear, while Uber rides may at any point vary depending on the time of day, the mileage of the journey, and the number of drivers on call, the difference here is that when all of those factors are equal for two different riders, those riders might still be charged differently. One example given in the report is that a ride which sees point A (departure location) and point B (destination) both occurring in an area which is deemed (presumably by machine learning) to be more affluent, the cost will be higher, compared to a ride in a less-affluent area – which covers the exact same distance, with the exact same driver availability, and at the exact same time of the day. With the presumption being that the person in the more affluent area, is likely to be more willing to pay more for the ride. The person is part of the equation, and in some respects, more integral than the distance in determining the price.
However, it does seem that this practice is not widespread with Uber just yet. Instead it is one that is said to be in testing (and has been for months) in select cities, although no information was provided on which cities. Likewise, while the additional revenue that is generated from the person-inflated costs are not going to the drivers, Uber reportedly explained that the extra income is being fed back into the Uber system in one way or another. While this is reportedly only an in-testing feature, the report does go on to highlight that Uber is looking at this measure as part of its long-term strategy to become a more viable and stable business.