Hacking Uber’s Surge Pricing

Surge pricing. If you’ve ever taken Uber you know what that is. Demand is high for rides, so the price goes up. It doesn’t always seem like that is the case though when you see surge pricing in effect at odd times and I found out some interesting information yesterday.

I was at a meeting when someone mentioned that Uber has a team of employees whose job it is to keep the drivers from hacking the surge pricing system. This person thought it was only in effect on the East Coast, but I mentioned that I’ve heard from online groups that the drivers in San Francisco are doing this as well. Here’s how it works:

When Uber isn’t surging the price is usually less than a taxi. This is good for the riders, but not the drivers. So the drivers have organized online through various ways of communicating to all go offline when Uber does not have surge prices and then request and cancel rides to increase demand causing Uber’s servers to automatically turn on surge pricing thereby increasing the cost of the fare.

There have been recent articles over the past couple of days of Uber & Lyft accusing each other of booking and canceling rides as a way to take drivers off the road. While I don’t know about Lyft because I haven’t met as many Lyft drivers the same might be true there so that in reality it’s not drivers collecting to try to screw up the competition, but the drivers are actually working to increase their profitability by hacking their own systems. This is all just theory from me since none of the other companies working as TNC’s are being affected and none of the other companies increase their pricing when demand is high. In the end it seems that the only people who benefit from less drivers being on the road is the drivers because that then increases how much money you can make.

As an example, I tweeted that after Outsidelands because of Uber’s surge pricing [Lyft doesn’t give you estimates] it would have cost me $40 for a ride home just over a mile from the concert. While this wasn’t a forced form of surge pricing because demand definitely was high, there was also traffic involved which means that $40 estimate [or $75 estimate to get from Outsidelands to Russian Hill] didn’t take into account that it would be a slower ride which would increase the cost and drivers income even more making the fare more expensive.

Most of the drivers who were driving during the Outsidelands surge pricing were making between $60-$100/hour. This is much better than the $17-$30 you hear drivers talk about during non-surge times. Some of these drivers where earning the equivalent of a 40 hour week at $15/hour in six hours in one day.

Now can you see why drivers would like to be able to drive only during surge pricing? I would suspect that because surge pricing pops up so much that Uber isn’t working too hard to stop it because after all it just increases their bottom line.

A lot of this is just speculative talk as I’m not on the inside with Uber, but I am on boards where there are lots of Uber [and Lyft] drivers with loose tongues who think that no one will ever see what you’re posting on the internet and if it’s on the internet it must be true. 🙂

July 16, 2014December 18, 2021

Need A Ride To The Airport?

This isn’t getting mentioned in the media or even in any bloggers so I figured I better scoop this story for all my fellow TNC drivers so that the public knows and understands a current problem that we all have now that is especially bad in San Francisco.

In September of 2013 The CPUC decided that ridesharing companies such as Sidecar, Lyft & Uber had every right to operate in California. The CPUC call the companies TNC’s for Transportation Network Companies because they use cell phones to communicate ride requests as well as the processing of payments for rides. One of the little things that was sort of buried in the decision was that all TNC’s much work with local airports to establish an agreement for operating at these locations.

As you know I drive for Sidecar and it was always the general rule of thumb that you could drop off, but not pick up passengers at SFO until further agreements could be reached because at the time that was what the airport had written into it’s laws. Any company doing business on the airport premises or off for the purpose of picking up passengers on airport property had to have an agreement in writing with SFO. Nothing was said about dropping off people so that what we went with.

Well, things have changed. SFO has issued a statement to all TNC’s that until they get a permit from them they cannot drop off or pick up passengers on SFO property. I believe LAX has issued the same statement, but not pretty much every airport in California is like this. From my experience with Sidecar I know that they are actively pursuing the permit, but they have run into a few snags from SFO’s list of items TNC’s need to provide in order to get the permit. This isn’t only a Sidecar problem, but something that all TNC’s have a problem with. Some of the requests are based on old technology that doesn’t apply to new technology. Kind of like if the horse trade organization said that all cars needed to have distemper shots so they were healthy. The two don’t necessarily work together. All the TNC’s are trying to work the bugs out, but currently, no one has a permit.

The biggest problem and this is the most important thing that anyone who uses TNC’s for transportation needs to realize that as of right now the airports are off limits. Let me put that is a bit large type so it stands out:

TNC’s cannot drive you or pick you up from the airport.

Please pass this along to all your friends, neighbors, everyone. This has become more of a problem because the airports and especially SFO are starting to crack down. I see reports daily of drivers for many of these TNC’s getting stopped and ticketed for dropping off or picking up passengers at SFO. I’ve heard that it’s happening at other airports in California as well, but SFO is the worse.

Some of the TNC’s are being a bit passive aggressively defiant in that they are telling drivers they will cover the cost of the ticket [which I have heard runs between $220-$600 depending on what they write you up on], but they aren’t telling drivers not to take people to the airport. This makes some of these TNC’s look bad to the CPUC who has given them the right to operate in California. Sidecar has officially told all of it’s drivers to not accept rides to or from SFO and that is easy because riders have to put in their destination when they request a ride. Sidecar is also working on blocking requests to the airport until they can resolve the problem with SFO. Those other TNC’s aren’t doing this.

Why is this a problem for you the rider? The CPUC has given TNC’s a right to operate in California and it was the first state where this was done. All of these companies have started in San Francisco as well so we are the bullseye that everyone is aiming for. Many of you love TNC’s because they’re more pleasant than taxi’s. TNC drivers are held more accountable than taxi drivers to the point that we’re seeing a lot of taxi drivers changing their attitude and coming over to work for TNC’s because they can make more money with less outlay of cash [you do realize that taxi drivers have to pay upfront before the cab even leaves the lot]. In San Francisco and the Bay Area TNC’s have changed the way people get around. TNC’s you can request and they show up within minutes. They don’t demand a tip [though they appreciate it], you will never hear, machine is broken, cash only and in general the drivers are much more pleasant to ride with. Pricing can even be less expensive than a cab frequently.

If you want to see this all go away then go ahead and book rides to the airport. There will always be drivers who will take the risk that don’t understand that while they might get $35 from that ride to the airport [less than a taxi] in the end they could help bringing TNC’s in San Francisco, California and then spreading out to the rest of the country and world to an end. I happen to like driving for a TNC and I’ve met lots of fun and interesting people and made lots of new friends. I know I’m helping out people who need to get somewhere quickly and it’s giving me a way to make money on a flexible schedule. Please do not ask for trips to the airport because if you do you might find yourself walking home at 2am on a Saturday night or waiting an hour to find a taxi to hail.

February 13, 2014December 18, 2021

Taxi’s vs. TNC’s

I’ve been reading a lot lately of the war between taxi drivers and those who drive for TNC’s [that’s the new name for ride sharing companies such as Sidecar, Uber & Lyft]. Actually, it’s not so much a war between the two as it is taxi drivers voicing their anger to just about anyone in the media who will listen. This is were is starts to get interesting.

The reality of the situation is that the cabbies should be looking at the system they’re operating in and quite a few have started. Approximately one third of all taxi drivers have stopped leasing cabs and started using their own cars with TNC’s, mostly Uber, because they are well known and offer the chance for them to make more money through Uber’s surge pricing. It’s not the TNC’s that are a problem, it’s the cab companies that have to charge the drivers so much in order for them to drive the cabs.

One taxi company owner was quoted asking the question, what’s to keep me from buying a bunch of cars and running my own ride share company? Well, to be honest, nothing. There are actually several that are doing so right now. The owner wouldn’t have to purchase the exorbitant taxi medallions [$250k/car], and they wouldn’t have to provide comprehensive insurance to the drivers as they do now, but they could rent the cars out to drivers who don’t own a car and collect on what they make paying a small percentage to the driver. Cab company owners like this idea.

For the drivers, they wouldn’t have to sit down and take a 7 hour class and test [yes, it’s not a very comprehensive test and they are allowed to consult notes] and they can get started quicker with no outlay of cash from their pocket. To get serious for a moment, what cabbies are taught in the training school is minimal at best and they usually take the test right after the class so what they do after they’ve passed don’t necessarily apply to what they just learned. The cab company owners don’t like that idea.

So in the end you’ve got the cab company owners pushing the drivers telling them how bad all the TNC’s are, when in reality it’s the system that the cab drivers have to work under that is the problem. When the TNC’s started as Ride Share companies there was a lot of anger at these new drivers, but now that many cabbies are moving over to the TNC’s they might be yelling at a fellow driver that’s just decided to switch teams in an effort to make more money.

I haven’t had a cabbie yell at me in months lately and a few have actually talked to me about how they could get into the business. One thing that sets apart cabbies from TNC drivers that I think a lot of cabbies learn quickly is that they’re driving their own car and they can’t treat it like a car they’re renting for a shift. Everything is now on them to keep the car looking nice and they have to make sure the brakes are working and the shocks are in good shape, not the company owners. That’s a new way of thinking for a lot of cabbies, but if it makes them more careful drivers when they’re out on the road then everyone wins in the end.