The car-hailing service Uber can detect when a user’s smartphone is low on battery, and therefore willing to pay more to book a ride.
Uber, which has faced the ire of London’s tax drivers since launching in the capital in 2012, can tell when its app is preparing to go into power-saving mode, although the firm says it does not use this information to pump up the price.
Keith Chen, head of economic research at Uber, told NPR that users are willing to accept a “surge price” up to 9.9 times the normal rate, particularly if their phone is about to die.
“One of the strongest predictors of whether or not you’re going to be sensitive to surge… is how much battery you have left on your cellphone,” he said.
“We absolutely don’t use that to push you a higher surge price, but it’s an interesting psychological fact of human behaviour.”
The dynamic pricing of Uber, which raises fares at peak times to encourage more of its freelance drivers to make themselves available, has got the firm into hot water on several occasions. The business endured fierce criticism for hiking prices after a hostage situation in Sydney in 2014.
Uber
Taxi drivers protesting Uber in Sao Paulo, Brazil, earlier this month Credit: Cris Faga/Zuma Wire / Rex / Shutterstock
“As you can imagine, I hear over and over again both at my dinner table and at family gatherings that surge pricing can feel very unfair to customers, but it’s been a really integral part of Uber’s success precisely because the whole goal of the company was to replace a really frustrating experience with taxis with service that’s just ultimately reliable,” said Mr Chen.
When Uber first introduces surge pricing to a city, even a small jump in price to 1.2 times the normal rate is enough to discourage 27pc of potential customers from booking.
However, cities with more established Uber services see a smaller 7pc reduction when this price rise kicks in, showing customers get used to the idea, Chen said.
“They may not love you at the company because of it, but they’re not quite as put off by it as before,” he said.
Mr Chen also noted the quirks of psychology that make passengers more likely to ride when the price is 2.1 times normal, rather than 2.0 times, which chimes in their consciousness as being twice as expensive.
“Whereas if you say your trip is going to be 2.1 times more than it normally was, wow, there must be some smart algorithm in the background here at work, it doesn’t seem as unfair,” he said.
Uber, which was founded in San Francisco, has expanded rapidly into more than 400 cities worldwide.
http://www.telegraph.co.uk/business/201 ... ut-to-die/
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