Dynamic pricing by ridesharing companies
The Dynamic pricing or surge pricing occurs when the demand is high. The cost of the rides will be more than the regular pricing because the demand is more than the supply. When the drivers are considerably low the ridesharing company cannot meet with the increasing booking request and so they will introduce the surge pricing option in their service.
The surge price depends of different variables like the estimated traffic in a particular location, the distance of the predicted route, number of drivers and riders using the service at the given time and the estimated time.
The surge pricing will ensure that the passengers receive their ride by matching with the available drivers, but the cost of the trip will be higher than the normal rate. However, the increase in the price will encourage more drivers to get on the road and trip in the area where the demand is high. Because the drivers can also earn more money than the amount they earn on regular trips. The riders on booking a ride will be intimated if there is a surge pricing, so that they can choose whether to book the ride or not.
Surge pricing made its way
When the BART service was shut down because of the power line issue, many of the commuters turned to the online ride hailing service Lyft and Uber to head back home or to the office. But to the disappointment, the riders faced increased surge pricing by both the companies.
According to the report, the ride hailing companies surged the prices to two hundred percent that frustrated the passengers. Even the cheapest ride options like the Lyft Line, Uber X and carpooling services were costly at that time.
The ridesharing company increased the ride fare because of the high demand for the service in the West Oakland area. The cab fare skyrocketed on Monday morning after the suspension of the BART service because of the collapse of the power line. Some of the rides got canceled and the commuters had to book another ride, while others shared their ride.
By utilizing the increasing demand, the ridesharing companies increased the surge price rapidly as much as seven hundred percent. Also the cost of one way trip to travel across the bridge was between sixty dollars and one hundred and ten dollars, while the cost of the ticket is only three dollars from West Oakland to Embarcadero. Even the regular price to cross the bridge id not more tat twenty dollars in either Lyft or Uber, but the ride hailing companies played well by using the given opportunity and increased the surge price to an extreme level.
The spokesperson of Lyft said that the drivers will be normally available in the area when the demands are high, but this BART incident was an expected one and so the company did not have many drivers near that area. And so the lack of drivers and cabs were the main reason for the company to increase the cab fare.
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