Uber pilots 'upfront pricing,' masks surge rate


In an effort to push more of its customers to carpool, Uber is experimenting with a version of its ride-hailing application that displays the maximum cost riders will pay to get to their destination.

Termed "upfront pricing," the tech-driven transportation giant's tweaked pricing screen now shows the total cost for the cheaper carpool option, called UberPool, alongside the slightly pricier UberX fare, during the booking process. The test is currently running in a handful of markets where Uber's carpool option is available, including San Diego, Miami, New Jersey, Philadelphia and Seattle.

While the pilot marks a new level of transparency for Uber when it comes showing customers exactly how much they can expect to pay for a trip, the new model masks the individual costs that make up the fare. That means riders presented with the upfront pricing view will no longer see the inflated percentage rate they can expect to pay during peak hours, which the company has historically referred to as "surge pricing."

"Uber doesn't want you to know that tonight it's going to cost you 150 percent of what it would cost you any other day of the week," said Steve Nielander, a finance lecturer at San Diego State University. "(With) fixed pricing, you're almost completely uninformed because you don't know the standard rate."

Still, some customers, particularly those who want to limit their risk of paying an unknown sum, will appreciate knowing the price before they get into the car, he added.

Upfront pricing automatically calculates several supply-and-demand variables including the time of day, distance to the destination, traffic conditions, toll fees and surge rates to arrive at a total cost. Customers will never pay more for a ride than the price displayed, unless they alter their destination, though rides could end up being cheaper than the originally estimated fee.

"More people choosing to share the ride instead of traveling alone is not only good for our cities and the environment, it's good for the pocketbook," said Uber spokesperson Tatiana Winograd. "That's why we are piloting a new feature that will make it even easier for riders to compare the price of a shared versus solo ride from directly within the app. By ensuring that riders can easily see how much they can save by carpooling, we're aiming to put more butts into fewer seats."

First launched in San Francisco in September 2014, UberPool lets cost-conscious passengers with a few extra minutes to spare pair up with another rider headed in the same direction. The shared ride service is now available in 34 international markets, including Los Angeles and New York City.

By pitting prices side-by-side, Uber hopes riders will see the value in picking a Pool trip. The company's upfront pricing test, however, also seems designed to distract passengers from its least popular feature: surge pricing. Outside the pilot, Uber's application tells passengers when they'll be paying a premium for rides. By featuring the total price instead, Uber could ease customer fears over how much they'll be paying while simultaneously discouraging them from switching to a competitor's ride-hailing application.

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