Big Red Car here. Ahhh, 70F and sunny in the ATX. You know that’s pretty damn sweet, ya’ll. On Earth as it is in Texas, indeed.
The Boss is still skiing in Steamboat and he’s reporting 35F and sunny — sunburn, Boss. Get the SPF working for you. Sunscreen, the most dependable service available and the best advice ever.
So, have you been following the saga of the Uber pricing in NYC during the recent snowstorm which has given rise to outcries of predatory pricing. Predatory pricing, you say, Big Red Car. Do tell.
Uber
Uber — https://www.uber.com/ — is a transportation service like a limo or taxi company which through a smartphone app allows one to summon a car.
It is currently operating in a bunch of cities but they are cities in which “car for hire” services are attractive — dense cities. They are in North America, Europe, Africa, Middle East and Asia (including Australia). No Uber in ATX but Uber in the Big D, Dallas.
Their special sauce is the recruitment of first rate drivers operating first rate vehicles.
The Boss has used them several times in New York City and Philadelphia. They are very good.
Pricing model
It is not perfectly clear what the pricing model is but the service is generally a bit more expensive than a “normal” yellow cab.
When you use the app, you can do it all on a pre-approved credit card and you can affix an agreed upon tip. You set the tip amount.
Upon completion of the ride, the driver will give you a receipt. No fumbling to pay the driver. Leap out and all is taken care of for you.
You can see that this could be perceived as a premium service with a premium price.
In many instances, the service is worth the price. And why not?
Naughty or nice?
During the recent snowstorm in New York City, Uber engaged in a bit of behavior that has folks crying foul. Well, the’re crying a bit more than foul, Old Sport. A few folks were saying: “Uber, you are a rotten mother fucker!” [Ooops, sorry that got away from the Big Red Car. Sorry indeed.]
Why, you say, Big Red Car, why?
Uber raised their prices during the storm to:
1. $35 per minute; and,
2. $175 minimum ride charge.
Read these two stories to get an idea of whether Uber was being naughty or nice:
http://www.theverge.com/2013/12/18/5221428/uber-surge-pricing-vs-price-gouging-law
Huh, Big Red Car, that’s a lot of damn money. A lot of damn money. Hell, it’s predatory!
Now, Old Sport, that’s for you to discuss and decide not the Big Red Car. The Big Red Car brings you the info, you decide what it means.
Technology — bludgeon?
Uber is able to “see” how many cars it has out on the street at an instant in time. This is the supply.
Uber is also able to see how many customers are requesting service and where they are located. This is the demand.
This technology allows Uber to see the supply and demand match at any instant in time. This is the pricing insight.
This intimate knowledge — created by the service itself — is the driver of the temptation to engage in a predatory pricing practice.
What is fair?
In any business transaction or contract, there is an expectation of fair dealing and good faith. Has Uber met those expectations?
It is generally illegal to engage in “predatory” business practices and predatory pricing is the main stream of such complaints.
1. So did Uber fail to deal with its customers in good faith or unfairly?
2. Did Uber take advantage of its customers by engaging in predatory pricing practices?
In the opinion of the Big Red Car, the answer is unfortunately YES. YES, Uber engaged in predatory pricing, bad faith and unfairness by manipulating its prices thereby taking advantage of the weather’s impact on its customers. A lump of coal for Uber, please, Santa.
But, hey, what do I really know anyway? I’m just a Big Red Car. Uber — nice. Uber pricing strategy — naughty.
