A Geneva rider felt trapped by the company who announced by SMS the increase of his race at the last minute.
Anticipating, Fred * had ordered an Uber car in advance to go very early Saturday morning to the airport from Plainpalais. By SMS, the company announces a price between 19 and 36 francs. At 4:10 am, while waiting with his suitcase on the sidewalk, he receives a new text message. Uber announces that given the strong demand and under its “dynamic pricing” system, the price range is multiplied by 2.5. “I could cancel without charge, but at that time, I really felt hijacked,” Fred complains. How could I have looked back at the moment?
But he is not at the end of his surprises: he receives first a bill of 19 francs, then a corrigendum for error on the distance. The painful climbs to 90 francs. “The trip cost me as much as my flight for Lisbon paid 92 francs,” exclaims Fred.
Scandalized, he asks for accounts. The company does not change its position arguing a geolocation error and judging its tariff calculation the best to provide the best care service.
On its website, Uber explains that “the price increases correspond to the temporary increase in prices to encourage drivers to hit the road and to go to the areas of the city where the demands (…) are highest. “. If there are many orders in an area, the price will be revised upwards. The American company specifies that the customer can refuse the assumption of responsibility. “For a planned order, we can not predict in advance what will be the demand from the users and the availability of the drivers at the time of the race,” says Uber.
Shortly after Mainstream newspaper contact with the company, Uber announced to Fred the full refund of his race as a “commercial gesture”. “That’s good news, but I do not understand how Uber can justify its on-demand pricing on a commanded race,” he says.
*Alias for privacy
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Uber, a taxi-type service, is definitely a trailblazer in this tech age. Investors get excited over Uber because its growth is unstoppable. However, they’re some natural limits on this growth.
TheStreet.com’s opinion is that Uber may have met a natural equilibrium with taxi services, preventing Uber from further growth. This idea is likely to apply everywhere. It has been found that recently Uber drivers weren’t making much money, partly because Uber was overstaffed to serve a limited number of riders. Uber drivers must compete with fellow Uber drivers for business.
Uber claims to have much market potential. People are finding ways to use Uber rather than owning a car. It has been found that Uber took about 10% of taxi’s business in NYC, but it’s difficult to see where more business will come from.
Drivers typically underestimate their own expenses when calculating their potential take away from Uber. Gas, insurance, and maintenance need to be considered when thinking about owning a car. These expenses go up with use, so an Uber driver will have to replace their car in about a third the time of a normal commuter.
Eventually, Uber drivers find their expenses outweighing their benefit. This leads to many Uber drivers quitting the business. This doesn’t mean that Uber is not a beneficial service to customers. Uber cars are quick and easy and more likely to drive long distances.
These points should be considered by investors when Uber enters their area. It may encourage investors to enact rules to protect their taxi fleets from complete destruction, without entirely keeping Uber out of the business.
The evidence that Uber can’t continue grow endlessly should make investors think. Uber has many challenges ahead, including transportation and labor rules and regulations that may requiring employing their drivers, and paying them as such. It is still up for question if Uber is worth investing in.
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