Uber's pricing - Feature or bug?
Felix Salmon and Rocky Agrawal both have their takes on the Uber fiasco.
What? You haven't heard of it? Well, go read the above notes, but if you don't feel like it, the short version is that Uber is basically the luxury (uber) 'black car' service for the iPhone-ers. You request a car in an app, and pretty damn soon one shows up, no fuss, no muss. Of course, its pretty damn expensive, but hey, thats what you pay for convenience, right?
The problem is what they call surge pricing, where they make the pricing dynamic at peak times (New Years Eve for example). The pricing was, well, non-intuitive at best, and people got charged a bajillion dollars to just go around the corner.
Caveat Emptor, right?
Well, not really. Felix and Rocky have somewhat different takes on this. Felix believes that this is actually a behavioral economics problem, i.e.
Drunk people who can't figure out what the correct price is?
Perfect! Soak them!
But, (!), be sure to promptly and immediately refund / credit / whatever people who complain. Done properly, you'll make plenty of money from people who don't complain, to more than make up for the rest.
There are plenty of examples of where people do this - Mail-in rebates, mis-labeled prices in groceries, etc. Ergo, customer support (and/or communication) FIAL.
What? You haven't heard of it? Well, go read the above notes, but if you don't feel like it, the short version is that Uber is basically the luxury (uber) 'black car' service for the iPhone-ers. You request a car in an app, and pretty damn soon one shows up, no fuss, no muss. Of course, its pretty damn expensive, but hey, thats what you pay for convenience, right?
The problem is what they call surge pricing, where they make the pricing dynamic at peak times (New Years Eve for example). The pricing was, well, non-intuitive at best, and people got charged a bajillion dollars to just go around the corner.
Caveat Emptor, right?
Well, not really. Felix and Rocky have somewhat different takes on this. Felix believes that this is actually a behavioral economics problem, i.e.
Rocky, on the other hand, believes that this is a GUI FIAL problem, i.e.Uber is a great idea in theory, and the mechanics of it tend to work well in practice. But Alex Rolfe has an important point: if Uber’s prices came down to the point at which they were vaguely the same as a taxi, then we could just lump Uber in with cabs as far as our mental heuristics are concerned. Because Uber’s prices are as high as they are, however, and because when they change they go up rather than down, customers react with snarky hostility.Uber, in other words, is a car service for computers, who always do their sums every time they have to make a calculation. Humans don’t work that way. And the way that Uber is currently priced, it’s always going to find itself in a cognitive zone of discomfort as far as its passengers are concerned.
Although Uber claims to have tested price elasticity on New Year’s Eve, what they really tested was the ability of drunk people to comprehend a bad user interface. If they had truly tested price elasticity, there should have been no complaints about the surge pricing because the people who paid 6x the normal rate would have been satisfied with their decision.Me, I'm going with Door No. 3, i.e., this was actually a customer support FIAL. In an evil way. The way I see it, the impenetrability of surge pricing is a feature, not a bug.
Drunk people who can't figure out what the correct price is?
Perfect! Soak them!
But, (!), be sure to promptly and immediately refund / credit / whatever people who complain. Done properly, you'll make plenty of money from people who don't complain, to more than make up for the rest.
There are plenty of examples of where people do this - Mail-in rebates, mis-labeled prices in groceries, etc. Ergo, customer support (and/or communication) FIAL.
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