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posted by cmn32480 on Sunday May 21 2017, @12:07PM   Printer-friendly
from the I-am-willing-to-pay-$0 dept.

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


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  • (Score: 2) by AthanasiusKircher on Sunday May 21 2017, @05:43PM

    by AthanasiusKircher (5291) on Sunday May 21 2017, @05:43PM (#513076) Journal

    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.

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