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Comment by umbs | Hacker News Reader

"A 2016 study by economists and Uber data experts found that when Uber alerted passengers that fares had doubled - part of Uber's older "surge pricing" scheme - ride purchases immediately fell by about 40 percent."

Based on my rough calculation:

1) Say, 100 rides at $2 each = $200 2) Double the price (surging), 40% ride drop: 60 rides at $4 each = $240

Uber still made 20% gain in revenue due to price doubling, right? That's a good thing for Uber, isn't it?

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yes, you've essentially calculated the elasticity of demand[1] and determined that moving up the price curve would be more profitable for uber. that's exactly the rational move for uber, in the absence of other competitive pressures.

[1] https://en.wikipedia.org/wiki/Price_elasticity_of_demand

There is also a value on people getting used to your service.

especially if you enter that market later with a better service. let the uber investors train consumer to jump in random cars while you perfect autonomous driving... save your capital for manufacturing cars... and Uber will be left with a very nice database... a pretty app... and no cars or drivers.

>1) Say, 100 rides at $2 each = $200 2) Double the price (surging), 40% ride drop: 60 rides at $4 each = $240

>Uber still made 20% gain in revenue due to price doubling, right? That's a good thing for Uber, isn't it?

the next big good thing would be market segmentation : those 40% at $2 while the rich 60% at $4 - the total would be $320 :)

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