Uber Users Blast Pricing as Costs Surge in Storms

REPLAY VIDEO
Your next video will start in
Pause
  • Info

  • Comments

  • VIDEO TEXT

Dec. 18 (Bloomberg) -- Rafi Mohammed, founder of Culture of Profit, examines Uber’s pricing policy as users complain after surges during snowstorms on Bloomberg Television’s “Bloomberg West.”

Windfall." cory johnson also with us from new york.

Cory and i had a conversation with an uber investor yesterday, and i have never seen so much the enemy and -- so much the him and lee -- vehemently outraged twitter responses.

What do you think of uber's rice policy and is it fair?

I think the central question is for a non-central service, in america, where you set the -- the market sets the right, should there really be a constraint to price when there is high demand?

Many industries do this, for instance, airline, hotel, car rentals, most major league baseball teams are doing this, so i see no problem with uber setting price according to the market, and what is one of the most important things is that this is a nonessential service, it is not like everyone is entitled to a black car.

Customers have a lot of next best alternatives.

They can take the bus, they can try to hail a taxi, they can actually wait because uber's search goes up and down, almost by the minute, or they could simply walk.

I have a new problem with a for profit company said it price equivalent to what the market will pay.

Quite a number of ventures -- venky ganesan compared uber to a life-saving cancer drug.

$200,000 a year for recovery.

Is that fair, or the more important to make sure the $200,000 is there seeking get better?

Rafi, is it fair to compare uber to a life-saving cancer drug?

I disagree with venky.

Life-saving cancer drugs, there are not very many alternatives.

For a pricey car, there are a lot of alternatives.

Uber is a for-profit business.

I do not think anybody will die if they do not get an uber ride during a snowstorm on new year's eve.

$35 a mile, doesn't that undermine trust that customers have in uber?

Their statement is that the they want people to think of them as reliable.

Availability is one thing, but some say price-cutting is another thing.

Right.

First of all, i think it is important to emphasize that once again a type of -- alternatives, it is a fair -- of next best alternative, it is a fair price.

From a trust standpoint, automatic it is a problem.

Uber's is not about being a low cost leader, it is not a walmart.

It is the contrary -- we offer efficient, good service, and for that, when times -- when there's too much demand we cannot offer that at a low price, we will increase price.

I think from a trust standpoint, it is important to empathize that in many cities, for instance in boston, uberx has come out and that we will be 30% below your taxi service, so there is a trust factor.

I think it is aborted that uber taken time -- it is important that uber taken time to plaintiff policy to customers.

Last weekend, it was clear that it was not clear to customers, there was a big uproar, and you will probably have the same problem on new year's eve.

Let's like cory get in on this action.

What do you think of rafi's argument compared to venky's. the notion of being nonexistent -- not extensional -- i'm passionate to the business application.

It is not just about back medication, but uber has made a choice, and when you compare to airline that is interesting because airlines are despised by their customers for the most part, and uber is making a choice to leave the issue of costs up to the moment, and that could ultimately really damage this business, but it is also something that was not technologically possible to truly skilled man at the moment and scale prices at the moment based on demand.

It is the thing you would see more at the stock market then you would see the providing of a service or a good.

It is interesting that this is possible, but we have never really seen businesses that can do this and wrote time and look to what the effect will be on customer loyalty and on customers who care about this service.

This shows a passion of uber users but it also shows how uber screwed this up and really hurt that trust that they are trying to build of a new service out in this world./ rafi, do you think uber faces a risk of damaging their business?

It comes down to what is uber 's brand, and it is you will offer something community, you can trust on uber to get you in a reasonable time.

No.

your book is about the one thing percent -- ultimately -- 1% -- ultimately they want to write service to everybody, not just the 1%. yes we will gouge you, that is a much smaller market than the bigger market of people who want transportation at a affordable cost.

I wouldn't agree with the word -- i would disagree with the word out.

--- word gouge.

Price is something the use of a mechanism.

Customers have the right to stand on the street and try to hail a taxi.

It is not about rights, it is about building a business.

If they're going to limit the ability to row their business if they take off a lot of people.

If they do not tick off anyone, they will build a bigger presence -- business.

It is a good question, and it is really important that they take the time to explain this pricing strategy so people fully understand it will stop a great example of a company that did not explain its pricing strategy is netflix a couple of years ago . they all the sudden increase the price of their streaming service by 40% and within three months, netflix stock went from $271 to $75. rafi, we will see what time what uber decides to do here, but i spoke with the ceo of uber a few weeks ago, he said they basically take a 20% cut.

Why not just take a smaller cut on the rare days when demand is so high and supply is so low that they need to raise the price three times, four times, why not pay their drivers a little more to get more drivers on the road for the benefit of their customers and for the purpose of building trust and reliability?

Certainly when there is a search price, the drivers certainly get 80% of that.

Are you saying that perhaps they should search prices in this instance?

Wi-fi nothing they should search prices on the days when it is 1.5, two times, but on the days when it is up to 35, it is dangerous come everybody needs a ride, why not knows where it's is is make an exception and take a smaller cut?

I do not see the reason to do that because once again there are people out there paying that price, and this is that are -- is their business model.

I should not see a reason why they would have to do it, and i do not think they should be apologetic for this rising strategy.

That is what they are doing.

They did not do a great job of conveying a, now it is their job to convey it to customers, and like any sort of luxury, high- end product, sometimes you can

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change