If you’ve ever hailed an Uber ride and thought afterward that you paid a lot less than you should have, those days may soon be over. The company’s latest change to its pricing model will offer you a rate that isn’t based purely on time and distance, but on what Uber’s computers think you’ll be willing to pay.
Uber executives revealed the “route-based pricing” system in an interview with Bloomberg today, noting that the currently-being-tested fare-setting system will be used in the 14 cities where Uber carpooling service is available.
The system uses machine-learning techniques to determine estimates on how much a passenger would be willing to pay for a ride based on their chosen route and time of day.
In other words, someone going from a downtown office building to a commuter train station might be willing to pay more than someone going the same distance between their apartment and a restaurant.
Bloomberg gives the example of an Uber traveling from one ritzy neighborhood to another. That would likely result in a higher route-based fare than going from a nice part of town to a less-desirable address.
Uber’s head of product Daniel Graf tells Bloomberg that the company’s pricing systems have improved and evolved over time, with the company now employing statisticians and economists in order to provide the best prices.
The route-based system builds on Uber’s previously announced upfront pricing policy that provides users with a guaranteed fare window before they order a car.
Despite providing this transparency to riders, Bloomberg reports the same wasn’t true for drivers, some of whom claimed that Uber collects more on fares than it’s supposed to.
Uber says that it will now start telling drivers the price a passenger pays on each ride, but it won’t break down what percentage the company actually takes.
The company tells Bloomberg that it only takes what is left over after drivers are paid, and that it isn’t stockpiling revenue from the pricing system.
While drivers may enjoy a bit more transparency with the new system, analysts caution that if drivers stand to earn more from driving wealthier customers, those in lower-income areas could find themselves with few Uber cars on the street.
Uber could also find itself in hot water in cities where local regulations require ride-hailing services to offer equal access and levels of service to everyone.