Is Pricing Uber’s Achilles Heel?

While Uber is busy expanding internationally and fending off regulatory battles, its competitors are still at the drawing board trying to come up with ways to stem the momentum of the ride-hailing industry’s undisputed leader. That’s proven to be an uphill battle, though, as rivals like Lyft and newcomer Gett have struggled to target weak points in Uber’s armor.

However, could a new focus on Uber’s surge pricing help its competitors claw back some of the market share?

TechCrunch reported that Gett launched a campaign specifically tailored for Uber riders who feel they’ve been unfairly exploited by the app’s surge pricing feature. In a move that cuts right at the heart of Uber’s client base, Gett is soliciting Uber riders to send their surge pricing fees and receive equal credits in rides on their own platform up to $100. Credits are even rounded up to the nearest $5 increment to sweeten the pot even more.

Uber has defended its surge pricing policy in the past, even going so far as to claim that charging users more during peak usage periods actually gets more people to their destinations than vice versa. However, if Gett can convince a vanguard of users that Uber’s convenience isn’t matched by the fees it tacks on, it may spur an exodus of bargain-seeking riders.

This isn’t the only angle where Gett is going after Uber on its pricing strategy. While riders are an essential cog in any ride-hailing service, the drivers that ferry them from point to point are an equally crucial element – and Gett has also shown a willingness to target how well the financial scales are tipped against them working with Uber as well. In October 2014, Gett started to run a series of ads located on the back of New York City buses advertising the potential $110,000 they could make driving for Gett with 40-hour work weeks.

While Uber’s surge pricing has rubbed more than a few users wrong during hurried times, the company’s older competitors don’t appear to think that the ride-hailing leader can be dethroned by targeting its pricing strategies alone. Lyft, the Uber rival which was the alleged subject of some clandestine startup warfare tactics by Uber, has taken to two unlikely ways of cutting into Uber’s domination: ride bonuses and civic planning. The Verge reported that starting Friday (Nov. 13), riders on Lyft could choose to hail a “Bieber Mode” cab, which would net them not only a ride ($5 minimum), but a discounted $5 version of Justin Bieber’s new “Justice” album and a $5 credit toward their next ride with Lyft.

Lyft is also taking their fight against Uber behind the scenes with some advanced analysis on how riders use these services to guide their way toward more customers. Next City explained that Lyft has placed a particular emphasis of late on partnering with municipal transit authorities as a way to supplement the usual travel behaviors of commuters and other habitual travelers. Working off data that suggests nearly 33 percent of riders in cities like Boston use Lyft and Uber to go to and from public transit stations, Emily Castor, director of transportation policy at Lyft, is tasked with ensuring that Lyft is not only legally allowed to operate in tandem with bus depots and airports, but also that the service’s features are deeply integrated into travelers’ experiences.

“I think in the next year you’ll see a deeper integration starting to emerge,” Castor told Next City.

“I think that is something that could open up a new set of riders to us,” Castor added. “It would benefit Lyft to encourage people to take trains for long journeys, because they’re unlikely to take Lyft the whole way. They’re much more likely to drive that distance. But if they can take a Lyft to the train station, they’re much more likely to do that.”

Only time will tell if Castor and Lyft’s unorthodox approach to the ride-hailing space will prove a coup de grace to Uber’s supremacy or whether Gett’s more direct pricing methods will prove effective. Whatever the case, time may be exactly what Uber’s competitors don’t have enough of as the internationally recognized brand continues to soldier on despite everything that’s been thrown in its way.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.