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Uber drivers have been complaining that the gap between the fare a rider pays and what the driver receives is getting wider. After months of unsatisfying answers, Uber Technologies Inc. is providing an explanation: It's charging some passengers more because it needs the extra cash.
The company detailed for the first time in an interview with Bloomberg a new pricing system that's been in testing for months in certain cities. On Friday, Uber acknowledged to drivers the discrepancy between their compensation and what riders pay. The new fare system is called "route-based pricing," and it charges customers based on what it predicts they're willing to pay. It's a break from the past, when Uber calculated fares using a combination of mileage, time and multipliers based on geographic demand.
Daniel Graf, Uber's head of product, said the company applies machine-learning techniques to estimate how much groups of customers are willing to shell out for a ride. Uber calculates riders' propensity for paying a higher price for a particular route at a certain time of day. For instance, someone traveling from a wealthy neighborhood to another tony spot might be asked to pay more than another person heading to a poorer part of town, even if demand, traffic and distance are the same.
Source: Bloomberg
(Score: 4, Insightful) by AthanasiusKircher on Sunday May 21 2017, @01:41PM (3 children)
That's quite an overgeneralization, don't you think?
Centralized planning -- at least regarding prices -- does work in many cases. In fact, the whole concept of fixed prices originated with corporate "centralized planning." The big chain stores and department stores that grew in the early 20th century couldn't deal with teaching inexperienced clerks to haggle over prices all the time. So, they hired cheaper workers and fixed prices -- more profit for all, due to the miracle of "centralized planning."
But with instant internet pricing that can be changed on a whim, there's no need for that anymore. Now an algorithm can change your price on the fly.
Anyhow, whether fixed prices are best also depends on your definition of whether planning "works." If your goal is to ensure fairness throughout your pricing system, it may actually "work" quite well. If your goal is to maximize corporate profits through any method available, it may not "work" well. Lots of consumers who end up getting worse service under the "maximum profit" metric may prefer the "fairness" metric, which is basically the whole rationale for regulation. Sure, it can often fail in various ways too, but consumers are not always irrational for demanding "centralized planning" -- it may actually "work" better for them personally.
(Score: 1, Insightful) by Anonymous Coward on Sunday May 21 2017, @02:39PM
The underlying system (the market) is inherently decentralized; it doesn't matter that a pocket of centralization develops as a matter of efficiency—should that local centralization become dysfunctional, the whole system drops back on the underlying decentralized system (e.g., the variation and selection of competition and consumer choice), thereby allowing new, working, local pockets of centralization to replace the dysfunctional ones.
"Fairness" means nothing. It's a completely subjective notion, which is why it never works to shoehorn "fairness" into what is supposed to be an objective system. You only achieve objective reality through the negotiation of voluntary interaction, on a person-to-person basis (and, obviously, on an organization-to-organization basis, as determined by the voluntary association of individuals to organizations, etc.).
(Score: 4, Interesting) by Thexalon on Sunday May 21 2017, @04:18PM (1 child)
No, it didn't, actually.
It started with Quaker merchants, who made an intentional switch to fixed pricing because haggling necessarily involves dishonesty and they wished to be absolute truth-tellers. Quakers got a reputation as being extremely honest businesspeople, which enabled them to succeed in business by having the trust of those around them.
This reputation was so strong, that's why someone decided to use one as branding for oatmeal.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2) by AthanasiusKircher on Sunday May 21 2017, @05:43PM
True. I was oversimplifying the history and pointing out why the idea apparently spread, since it made transactions and bookkeeping simpler for large corporations.
Buy yes, the actual origin is with Quakers. Well, actually one can trace elements of it back through history to the Sumerians, if we really want to go there. But the popularization of the idea seems to generally be credited to John Wanamaker and H.R. Macy (the latter was a Quaker), who opened stores in Philadelphia and New York respectively with fixed-price policies. Yes, customers seemed to like the "fair dealing aspect," but business owners liked the fact that they didn't have to train clerks to haggle, it reduced time spent on transactions when business was swift, it allowed the calculation of reliable profit, and it greatly simplified bookkeeping. The idea spread because all of these things facilitated the growth of the large corporate retail industry. Individual shop owners continued to haggle for a few more generations, but large store chains couldn't be bothered with such nonsense.