Uber Is Ripping Off Frequent Riders and Here’s How to Avoid It

Over time, today's swing consumer becomes tomorrow's safe user, so it is really complacency that is penalized. That makes some sense, but is hardly the utopia where we get to spend less mindshare on fundamental services.

But, once they get some sort of monopoly everyone is going to be worse off. Something which is happening right now with Grab's acquisition of Uber.

Edit: Apparently this was an old wive's tail or something. Oh well...

Its a side effect of an optimization function, basically. New customers are price sensitive. Loyal customers are.. loyal. They will buy anyway. Advertising is expensive, and discounts can be a cheaper way of getting them. If your decision framework is "do what brings the most growth by lunchtime" you will often end up with new customer perks.

If you have freebies and discounts to spread around, spending them on newbies will produce more sales.

Politcal campaigns often consider voters in reverse order to loyalty. Party members are guaranteed votes, so don't spend effort courting them. Party supporters need some attention, to bring them out. Fence sitters or potential conversions are courted vigorously.

Lots of tech "platforms" will be free for new users, cheap for small users and expensive for big clients. The big clients are more locked in, so it's hard to affect sales one way or another. New/small users are fickle, and more likely to respond to prices.

Banks have better rates for new customers, sometimes actual free money.

Its like when you don't put effort into dating your wife. It's not the right thing to do, but there are some difficult to avoid consequences to knowing she will go home with you regardless.

For small businesses this type of service still pays. I know bars who hold tables for hours on a Saturday to save them for the regulars who come the rest of the week. But even there, loyalty is to the staff more than the owners.

Optimistically, middlemen or automated tools that ease the pain of changing in hard-to-enter markets. In easier-to-enter markets, the emergence of companies respecting simple pricing (we've already seen some of this). Simplicity will win in the long run, again, unless it's a market that can keep competitors out.

I have no interest in repeatedly shopping around for new providers for things like energy, telecoms, savings accounts and so on. I just want to give a company money in exchange for services and have them continue to provide that service with reasonable increases in price as inflation happens. I feel like I'm constantly being bullshitted – "Good news, we're reducing your savings interest rate!".

Set a reminder to call cancellation every year or so. It’s annoying we have to do this, but it easily saves hundreds if not thousands of dollars a year.

If you're not already, find yourself a local deals site - it can really help you avoid getting screwed over by stuff like this. You can also wind up staying if you're willing to call your current provider back and say "here's what they're offering, beat it or I'm leaving".

In larger firms, you'd think the incentive would be to account for the drop-off caused by eroded goodwill, but functionally there's a middle level manager who is using this spike in numbers to jump to another role before the piper has to be paid by his replacement. Even if the company blows up, he can lateral safely with his new title.

I give major props to companies that reward loyalty. IntelliJ, for example, offers discounted rates the longer you've been subscribed. It works for them because it's an incentive to never let your subscription lapse, and it rewards the dedicated end-users as well with cheaper prices.

Source: https://www.jetbrains.com/store/#edition=commercial

Doing this will all of your bills can easily save you hundreds of dollars a year, but it's socially awkward and kind of a pain in the butt (especially if you actually have to switch providers), so most people don't bother. Companies know this and capitalize on it.

New customers got all sorts of incentives.

So, perversely, the system encouraged to switch providers every year or every 2 years.

Many people (myself included) don't do it because of the hassle.

This has always been so, it's nothing new.

I bet that would lead to complaints that companies are exploiting the less wealthy. The argument would be that less wealthy people might not be able to afford to switch to a new company where they would not have the long term discount.

In the meantime I'd get really bad offers (I want to say scam, but they were IMO deceptive) from other places (they were still legit financial institutions) for whom spamming me via mail wouldn't cost them much and they'd make plenty if I was dumb enough to take their offer.

Then I found I got the same, not a scam... but really bad offers from the places that I had done business with for years.

It really irked me when I'd get those fake check (actually a loan) things from a bank I'd been with for ages...

Eventually just said screw them and to a credit union who just keeps mailing me about local discounted baseball tickets. I can handle that.

I think safeway already does this with their just-for-u coupons which gives personalized deals on frequently bought items.

Thats pretty crazy.

This is just not true. In many jurisdictions, it's the maximum price and the number of hack licenses that are regulated. In those jurisdictions, taxis could charge less than the "regulatory" rate, it's just that none of them do...because the taxi biz is about artificial restriction of supply.

For instance, (at the time of writing) this Lufthansa one-way flight from Prague to Budapest at 1pm on May 20 costs $425 [0]. But this round trip flight from Prague to Budapest (which includes the 1pm May 20 flight) costs $343 [1].

[0]: https://www.google.com/flights/#flt=/m/05ywg.BUD.2018-05-20....

[1]: https://www.google.com/flights/#flt=/m/05ywg.BUD.2018-05-20....

The reason behind hidden city fares is, the price of SFO-NYC-BTV is for the SFO-BTV market, to compete with other airlines' SFO-ATL-BTV, SFO-ORD-BTV, SFO-Whatever-BTV or SFO-BTV direct flight. It has nothing to do with SFO-NYC market, just for this particular airline it happens to route through NYC. It discounted more than SFO-NYC market because competitions on that market. That's why competition is good for customers (history has shown us that when an airline has monopoly on a market, you can only expect the fares on that market to go up). That's also why it's against the contract of carriage you have with the airline and the airlines are working very hard to avoid customers doing that (if you associate your frequent flyer number with hidden city bookings, they might cancel your account. they might also put you on a blacklist if you are caught doing this frequently).

The airline practice similar to the Uber one is charging more for frequent flyers. United was caught doing that a few years ago (maybe they are still doing that).

Route preferences are one thing. Charging different people different $ is another thing.

That means there is at least a simple object representing your profile of you. Unless you mean profiling in the racist sense.

There was no change in my income but I became a frequent rider.

My trips started getting more expensive, Lyft stopped telling me “This is a good deal” on prices before trips, and all kinds of shadiness.

It feels like you’re being mistreated when you’re punished for using a service more than others.

I’d much prefer they give out a fixed amount free credits for new accounts, make surge pricing crystal clear, and then keep prices at a base rate.

Instead of trying to play 3 card monte with the real price of a ride.

The mechanics are different, but the goal is always the same: Store brands that are just repackaged brand products sold cheaper, slightly more comfortable travel experiences that cost disproportionatly more, support contracts and "enterprise features" for absurd prices, lootboxes in games, etc.

Some mobile games with in-app purchases do various flavors of this, but it's more based on willingness / capability to pay than affluence. And of course they're structured such that switching to a competitor would make everything you've previously paid in moot.

The difference between letting folks opt-in to a more overpriced service versus selecting it for them is huge, because it centralizes all the economic choices in Uber HQ. Uber knows you will pay more, but does it know that you have 5 kids to support with what's left over? Or that your costs come out of a non-profit budget? Or that your need for rides is associated with disastrous new medical expenses? These concerns are built into our tax code, but Uber doesn't have the interest or ability to align with any kind of moral consensus about what "able to pay" should really mean... they just have a lot of insight into what you're willing to pay for rides.

Early on, Uber was championed in some circles as a good example of technology enabling a two sided market to compete with highly centralized industries. Over time, they've stopped being a market, and insisted on becoming a broker that keeps both sides at an information disadvantage. This is a good way to collect rents, not to drive competitive service.

Some places have this thing called "public transportation" that is typically financed in this way.

Result of that would be disincentive to do anything that raised one's wages, I suppose.

And it requires that suppliers be able to know or discern things about their customers. If it becomes too severe, then the consumers that were overcharged have an incentive to either deceive their suppliers (as in the article) or to discriminate in the same way for the good or service that they supply (such as by adding a 50% surcharge to whatever it is you sell, just for known Uber owners).

It is economically more efficient for suppliers to always sell at the same price for everyone, and to not know anything about the customer other than the color of their money, but that is not a Nash equilibrium. A supplier can always get ahead by discriminating, if everyone else is not. It is therefore beneficial to discourage the practice by statute or by social approbation.

Income tax is often progressive, but doesn't affect any one good or service in particular, beyond financial instruments. We basically charge richer people more to have a higher savings and investment rate.

And mostly, people don't want to have to haggle, use coupons, and read sale flyers every time they buy anything.

Because in the case of taxes, you are paying to a collective fund to advance collective interest.

Paying more for some product or service will just fill the pockets of the owners. It is just thievery.

I don't know how you could bring that into the physical world successfully. But I always thought it would be cool if gas prices changed depending on the type of car you drove up in. Or if ATM fees changed based on how much money you have in your account.

It's basically the reverse of gouging people with low credit scores.

I don't think you can specify this. In principle this could subsidize rides for some people or it could increase profit and even if the money were put towards subsidizing rides there is no guarantee it's going to subsidize rides for the poor, there is no law that says the poor are going to receive these subsidies - frequently they don't because they don't because they're a lower priority for the company due to their decreased spending power, have less information about the marketplace and are less able to substitute between alternatives.

/sarcasm

We're here to help [you stop feeling discriminated by making your wife pay $12.16 fee too]!

/endsarcasm

Plus, Uber takes a huge loss on Pool and Express Pool especially when they first launch since they want to offer low prices to riders but they don't know the match % rates yet.

I think the point is not to shorten or speed up the driver's route, but instead to deliberately add inconvenience for the rider. So if you can afford it, you'll do traditional Pool (which now costs more) or UberX, while if you're truly price sensitive you'll deal with the indignity of Express Pool.

Uber has decided I’m a schmuck who must pay more for the same service. Not a fan.

For accommodation, the rates are usually a bit cheaper direct (often a few dollars), but unless you have/want hotel status, the rewards program at Hotels.com gives a lower effective rate.

Amazon experimented with it years ago before pulling the plug after consumer outrage.

Depending on your market, you may have a choice. I use Juno in New York and Scoop or Waze Carpool in the Bay Area as my primary choices.

The government had already regulated cab fares to where they couldn't just gouge the customer and (hopefully) the prices were fair to both the cab driver and the rider. Uber re-introduced risk into the equation, along with the opportunity to capture the consumer surplus.

Isn't this largely their own choosing? They're deliberately undercutting the competition to at best gain a foothold, or worst eliminate the competition entirely so they can put prices up.

Sometimes the comments in here are truly insane. How could you even suggest walking or biking between two California cities?

Just to add to the hilarity of your "global warming machine", here's a Google breakdown of the THIRTEEN HOUR WALK you suggested that this man take https://www.google.com/maps/dir/San+Diego+International+Airp...

I feel pretty safe though in saying that if you're driving Uber for extra income then you're probably not financially solid enough to uproot to save 3-4 gallons of gas per week.

Edit: Yes, public transit could indeed be an option to/from Oceanside. Probably wouldn't add much more than an hour each direction, assuming that there are appropriately timed trains for presumably early and late travel.