One of the biggest complaints Uber has had to face recently (and there have been many to choose from) is that the gap between what the passenger pays and the driver earns is getting wider and wider. Thus far, Uber has kept its billing and charging strategies quiet, but in the face of mounting complaints and question, the company has come clean…somewhat.
It’s no secret that the company’s current business model is far from sustainable, burning cash at a rate that no amount of scaling and adoption could save the upside-down economics in place. Speaking to Bloomberg , the company acknowledged that in some markets they’ve deviated from the familiar approach to something they have dubbed “route-based pricing,” using data points to determine what the most is that a customer is willing to pay. In addition to using distance, time, and driver availability to establish a fare, the company is going to use factors such as time of day, pick-up location, and drop-off location to determine the price sensitivity of the customer.
A big departure here is the company’s abandonment of supply-and-demand to exploit inefficiencies in human nature and demographics to take a bigger slice for itself: Goodbye Invisible Hand: Uber […]