How to hack Uber surge-charge fares by 10-20%

30 Oct 2015 | Author: | No comments yet »

Here’s how you can avoid Uber surge pricing.

In a pinch and need a lift? A new study by researchers at Northeastern University has found that the pricing scheme, which Uber uses to raise rates for its car-hailing service during times of high demand, can sometimes last as little as five minutes.Calling an Uber near Logan Airport increases surge pricing deep in Chelsea, while dialing up an Uber in Brookline has no effect on a multiplier on nearby Jamaica Plain.The classic advice about San Francisco’s mercurial weather — if you don’t like it, wait five minutes or walk five minutes — works equally well for Uber’s surge pricing.

That’s the conclusion of an analysis from Christo Wilson, a Northeastern University assistant computer science professor who studied Uber’s mysterious surge pricing formula. Based on the prices and locations of cars that Uber offered these virtual passengers, the researchers learned a few interesting things about how surge pricing works. A study from Northeastern University researchers published Thursday, billed as “the first in-depth investigation of Uber,” offers some tangible tips — and other fascinating insights — about the mysterious algorithm that guides the country’s most popular ride-share service. Researchers Le Chen, Alan Mislove and Christo Wilson created 43 new Uber accounts and virtually hailed cars over four weeks from fixed points throughout San Francisco and Manhattan.

As ProPublica reported, one of the main findings is that when prices rise, the number of cars in an area doesn’t go up much, even though Uber has long said that’s the point of surge pricing. The bottom line: Uber’s surge-pricing algorithm, which is based on supply of drivers versus demand of rides needed, resets about every five minutes, and changes based on zones that are often close together.

Moving just a few hundred feet sometimes made it possible to hail a normally-priced car again. “The vast majority of surges are short-lived, which suggests that savvy Uber passengers should ‘wait-out’ surges rather than pay higher prices,” the authors wrote in their study, according to ProPublica. The study also asserts that surge pricing actually kills off demand for Uber cars, to the point that many drivers end up leaving the surge area to try to pick up more fares. He is in Tokyo presenting the findings at the Internet Measurement Conference. “This essentially means that if you observe surge prices on Uber, your best bet is to just wait it out, because they typically don’t last long.” “The other recommendation is to look at the prices being offered in adjacent surge areas. Research: SurgeProtector, a free app, can tell you where to walk for lower rates and even input a nearby non-surge (or lower-cost surge) location to the Uber app for you. “We ping Uber’s servers to get information about surge status within a one-mile radius of you,” said Thomas Schmidt, who wrote the app as a “cool little hack” with his San Francisco roommate, Nikhil Bhargava, after Uber opened up its application programming interface.

Each of Uber’s ride-sharing options, which include everything from luxury black cars to shared carpools, were tested. (Wilson says the study did not test competitor Lyft because there’s no way to predict fares without actually hailing a ride.) “People love the ability to push a button and get a ride quickly and reliably — wherever they are in a city. If so, and if it’s close enough to where you actually are, you should be able to request a car and walk to the new pickup point by the time it arrives. The boundaries are not known to consumers. “[T]wo users standing a few meters apart may unknowingly receive dramatically different surge multipliers,” the scientists wrote. “For example, 20 percent of the time in Times Square, customers can save 50 percent or more by being in an adjacent surge area” a block or two away. The researchers say this method works much better for Manhattan than for San Francisco, where the pricing areas are a lot larger and there’s less variation in pricing between areas. It has also found an unintended use. “Drivers use it to find surge areas and drive to them without opening the Uber app,” Schmidt said. “If they open their driver app, it shows them as available and they have to start accepting rides immediately” even in the non-surge area.

But when the method did work, their virtual passengers were able to cut the surge multiplier by at least 0.5 (i.e., half of the non-surge price) in more than 50% of cases. Like Google altering search results based on location, or Facebook selecting what you see in your newsfeed, Uber’s algorithms are a “black box” — not transparent to the user, or completely to the driver, for that matter.

Wilson says he hopes the results “help the public better understand and evaluate the role of these algorithmic systems in everyday life” — especially after criticism Uber has faced for charging surge rates during Hurricane Sandy and the Sydney, Australia, hostage crisis, the study notes. Lyft Prime Time is capped at triple the regular rate, while Uber’s surge can go quadruple or more, said Harry Campbell, an Uber driver who runs TheRideShareGuy.com blog. – The team found a six-month long bug in the system that was causing some people to randomly get lower fares than others requesting rides in the same area. (The team contacted Uber, which has since fixed the bug.) – Plus, in the battle of East-West expensive cities, Wilson says New York City is the better market for riders.

When using Craigslist, AirBnb, or eBay, for instance, buyers and sellers have the same information about what products are available, and for how much — both sides have a lot of information with which to make price comparisons. Cabs might have very long waits, while Lyft might have Prime Time rates. “If it’s hard to get home on one app, it’s hard to get home on the others.” Uber is an outlier, these researchers explained, because under the Uber model, neither side of the transaction has all of the information. “With Uber, the drivers don’t know what’s going on, and the customers don’t know what’s going on,” said Wilson. “There’s an algorithm behind the scenes that determines what the prices are, and you essentially have no idea what’s happening.”

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