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Uber will begin experimenting next week with a new pricing scheme in 10 U.S. cities aimed at shifting ride-hailing demand away from city centers — and making more off each ride that does originate in an urban core.
Why it matters: Uber, like its rival Lyft, is under pressure to show it can turn a profit, and drivers have long complained of falling or inconsistent earnings. The move could help address both concerns while also nodding to criticism that ride-sharing apps have exacerbated urban congestion.
How it works:
- Rates will go up by about 5% for trips starting in city centers and decrease by about 10% for those starting in outer areas.
- This applies both to driver earnings and passenger fares.
- The cities: Charlotte, Phoenix, Kansas City, Indianapolis, Honolulu, Cleveland, Charleston, Richmond, Nashville, and Grand Rapids.
What they're saying:
We are testing raising prices near city centers, where it’s busier and harder to get a ride, while decreasing prices in surrounding areas — including in neighborhoods with fewer transportation options — to help riders request more trips. The goal of this pilot is to improve reliability in the busiest parts of these cities, while making it more affordable to use Uber outside the city center.— Uber spokesperson
Yes, but: Fare cuts have historically not been a pleasant PR experience for Uber. Its (now-defunct) annual January cuts were usually met with protests from drivers who felt they were being short-changed so the company could grow its bottom line.
- And as with some fare cuts in the past, there's a chance this may not have the desired effect everywhere.