Following Surge Pricing Outcry, Uber Lower Its Rates

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Travis Kalanick, Uber
David Paul Morris / Bloomberg / Getty Images

On-demand car service Uber has recently drawn a lot of customer ire for its surge pricing model, which jacks up the rates of rides hailed through its mobile app during high-demand situations like blizzards or New Year’s Eve. Now the company is lowering its fares in some cities to be more competitive with traditional taxis.

Thursday Uber announced that it is lowering fares in 16 cities for rides through UberX, its cheapest offering that utilizes drivers’ ordinary cars instead of upscale black town cars and SUVs. With the new rates, Uber claims it will be a much cheaper choice than traditional taxi companies in many cities. In Los Angeles, for instance, Uber says a ride from Beverly Hills to Santa Monica will cost $15.83 in an UberX vehicle, compared to $26.80 in a regular taxi. Prices will be cut 15 to 34 percent in Chicago, San Francisco, Seattle, Los Angeles, Phoenix, and Orange County. Unspecified price cuts will also occur in Minneapolis, Atlanta, Sacramento, Tucson, Indianapolis, Denver, Dallas, Baltimore, Charlotte and Nashville.

In an interview with Bloomberg Businessweek, Uber CEO Travis Kalanick said the price reductions were an economic experiment first and foremost. Not all the price reductions will be permanent. The company is trying to spur demand on the low end of its service while not lowering fares so much that drivers—who are sanctioned by Uber but operate their own vehicles—stop bothering to pick up customers. Uber is absorbing some of the cost of the price reductions by lowering the fee it collects on each fare. The move will also make Uber more competitive with the ridesharing services that have emerged in its wake, like Lyft and Sidecar.

While the price cuts will make Uber vehicles accessible to a wider audience, they won’t necessarily make finding an affordable Uber car on New Year’s Eve any less of a nightmare. The company has no current plans to end its surge pricing policy.