Careem and Uber’s price surcharge is here to stay | DAWN.COM

Over the past month, there has been a barrage of criticism by users of ride-hailing services like Uber and Careem. The reason behind this criticism has been the higher than usual fares due to price surcharges.

So why are we seeing this peak or surge pricing model come in to play? The short answer is simple: a shortage of supply of vehicles.

Expense vs convenience
When Uber first began rolling out surge pricing around the world, it was vilified with social media campaigns like #neveragain, which called for a boycott of the service. Careem now faces a similar situation in Pakistan.

For those speaking up against the surcharge, the issue is simple—the increase in the frequency with which peak or surge pricing is implemented. This is seen by many as a departure from the initial claims by the companies to provide an affordable mode of transport to the masses.

Industry norm

Uber follows a strategy that Walmart innovated and Jeff Bezos of Amazon implemented. Bezos allowed Amazon to sustain losses for two decades by selling on lower prices, and investing any earnings back into fulfillment centers, logistics, and new products.

Today, Amazon has been profitable for eight consecutive quarters, with annual sales that topped $100 billion.

Uber is following suit: Invest heavily in the early years on pricing and self-driving cars, so that you’re able to beat competition, dominate the markets, and reach profitability after an IPO.

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Careem and Uber’s price surcharge is here to stay – Pakistan – DAWN.COM.