New York City Might Cap Uber Surge Pricing


People love Uber because it’s convenient. You tap a couple buttons on your phone and a car comes and whisks you away.

If there’s one customer complaint about the company, though, it’s probably surge pricing, when the company drives up fare prices during times of high demand.

Uber’s surge pricing policy — as well as the “dynamic pricing” policies of other startups like Lyft — came under fire Monday at a New York City Council transportation committee hearing.

According to the New York Times, Councilman David G. Greenfield introduced a bill that would cap surge pricing at 100 percent of normal rates.

Uber’s surge pricing feature is great for the company’s business, since Uber keeps a fixed percent of fares. When Uber’s surge price multiplier kicks in, Uber makes more money. Uber says that by raising its prices, it encourages its supply — drivers — to get out on the road to keep up with increased demand.

“Uber’s dynamic-pricing model benefits both consumers and drivers,” said Uber public-policy expert Colin Tooze, as reported by the New York Post. “If prices were artificially capped within the normal course of business, consumers would be unable to utilize our safe, convenient transportation option because demand would simply overwhelm the available supply. When fares have increased, we repeatedly communicate that fact to the user.”

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