Uber CEO Surprised by Eye-Catching Fare: The Controversy of Dynamic Pricing

Uber’s feared price hike perplexes even its own CEO, Dara Khosrowshahi.

In a startling revelation, Khosrowshahi expressed his astonishment at a $52 fare for a mere 2.95-mile ride in New York City; the event occurred when Wired journalist Steven Levy took an Uber from midtown Manhattan to the west side of the city to interview the company’s leader.

During their conversation, Levy showed the eye-catching fare to Khosrowshahi, who exclaimed, “OMG! Wow!”

The interview took place in May during Uber’s annual product event, Go-Get. In a guessing game, Levy challenged Khosrowshahi to estimate the cost of the trip, to which the executive responded with a “twenty dollar” guess.

However, the actual fare turned out to be $51.69, including the driver’s tip, leading Khosrowshahi to react with surprise at the price increase.

Controversial dynamic rate

This development highlights the controversy surrounding Uber’s “dynamic fare”, also known as “surge pricing”, questioned by users on numerous occasions.

The dynamic fare, which increases prices at times of high demand, has been championed by Uber as a way to balance supply and demand, however it is the subject of criticism from users who feel affected by the price increases. prices at unexpected times.

Khosrowshahi justified the surprisingly high fee by citing the “dynamic fee” and explaining that inflation has contributed to rising prices overall. However, a Forbes report noted that Uber prices in the United States have increased four times faster than the rate of inflation between 2018 and 2022, leading to an 83% increase in fares in a period of almost four years.

Despite the controversy surrounding prices, Uber posted a strong performance in the second quarter of the year. The company posted a $394 million profit in the three-month period ended June 30, a significant improvement from the $2.6 billion loss it reported in the same period last year. Operating profit was $326 million in the quarter, marking the first profitable quarter since Uber’s founding in 2009.

Additionally, revenue increased 14% year-over-year to $9.2 billion, and the total number of in-app transactions grew 16% year-over-year to $33.6 billion.