‘Upfront pricing’: when is a ‘fixed fee’ not a ‘fixed fee’?

I recently read, with interest, an article by Emily McNutt in thepointsguy.com about Uber’s new ‘Upfront pricing’ model in the UK (see ‘Know before you go: Uber rolls out fixed pricing in the UK‘).

In short, as McNutt’s title suggests, Uber have introduced an ‘Upfront’ fixed fee pricing model option for its UK customers.

Wonderful news, and encouragingly McNutt writes:

“…with the introduction of upfront pricing, both the rider and the driver will know the exact cost of their trip before they confirm”.

As someone who enjoys knowing what I’m paying for upfront, this is nothing short of brilliant news (even though I don’t live in the UK nor use Uber 🙂 ).

But…

there’s only one small problem…

which is,

more often than not the rider actually doesn’t know upfront what they are paying for.

Why do I say that?

Well, because Uber UK’s ‘Upfront pricing’ offer comes with four [very small but somewhat important] scenarios under which the agreed Upfront price may change.

McNutt’s article sets these out as being:

  • If the rider adds or removes a stop in their journey;
  • If the final destination is more than one mile away from the originally requested destination;
  • If a detour is taken and the trip is further (40% and 0.5 miles further) and slower (20% and two minutes slower) than originally estimated; or
  • If the trip is at least 40% and 10 minutes slower in duration.

Let’s take a closer look at these:

  • If the rider adds or removes a stop in their journey – okay, on first read this one seems fair. But then I re-read this and saw ‘removes a stop‘; and asked myself: ‘How does removing a step make my fare more expensive (unless the change element here is to reduce the fare – which would be fair go!)?’
  • If the final destination is more than one mile away from the originally requested destination-again, seems fair. But it doesn’t say if this final destination is the ‘original’ final destination. If that is the case, why am I paying more for your miscalculation (see below)?
  • If a detour is taken and the trip is further (40% and 0.5 miles further) and slower (20% and two minutes slower) than originally estimated-not sure what a ‘detour’ is, but having been in the UK just before COVID I can tell you we did a lot of detours!

And so we come to bullet-point #4 – If the trip is at least 40% and 10 minutes slower in duration.

Here I have LOADS of issues.

As McNutt writes:

In other words, if you hit traffic and your trip has been extended by a significant amount of time, the fixed cost will likely increase.

Now that sounds a little wrong. A fixed cost that is allowed to increase because of a time-based element.

Taking a step back here, McNutt writes that:

Uber says that it bases the fixed price based on the best-available route between the rider’s pickup and dropoff points. It uses the expected duration and distance of the trip to come up with the exact figure, while taking into account anticipated traffic patterns and known road closures. Costs for tolls and additional surcharges will also be accounted for in the upfront pricing figure. When demand is high, Uber says it’ll account for that with “dynamic pricing” — a new take on surge pricing.

So Uber totally scopes the project, with information the rider likely doesn’t have access to (Google is good, but that good?), but then says: ‘If we got our calculation wrong, we get the right to readjust’.

To my mind this is essentially a ‘get of prison free’ card for Uber, which is fine – but let’s not then say this is Upfront fixed fee pricing, let’s call it out for what it actually is: a cost estimate at best.

And so why this post after so long away?

Well, no prizes for guessing what other (hint ‘professional services’) industry might have this type of fixed fee pricing mentality!!

As always, the above represent my own thoughts only and would love to hear yours.

rws_01

2 comments

  1. Well said! A couple of years ago, I sought to engage the services of one of those “so-called” fixed fee legal services provider. Yes, I got a fixed fee, but then when I read the fine print. guess what – there was the clause “if X happens, we’ll charge you in six minute intervals”. You’re pregnant or you’re not. You’re fixed fee or you’re not. Deal with it!

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  2. Couldn’t agree more. To make it even better, if the distance is shorter or the journey faster than originally calculated, guess what, Uber won’t reduce their fixed price… Uber doesn’t allow to chose the route, so their calculations for the upfront cost are (almost) always based on the fastest route, i.e. the longest and therefore most expensive route.
    And why exactly do I have to pay more if the driver insists on ignoring the app and takes detours? Surely as a rider I’m allowed to relax or check my phone if I wish to do so, instead of having to monitor my driver’s navigation skills?
    And really cannot argue with the so-called algorithms used to generate the upfront estimate… how can you even try to work out all those variables? I have experienced up to 65% difference in the same journey… at the same time of the day… with similar traffic and duration… no comment?
    I just really wish they wouldn’t call it fixed price…

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