![]() ![]() The feature has been designed to successfully achieve a balance between supply and demand which makes the company all the more confident of the final conclusion of the Dynamic Pricing model.Ride-hailing platforms like Uber, Lyft, Didi Chuxing, and Ola are transforming urban mobility by connecting riders with drivers via the sharing economy. This is evident through the Surge Drop feature in the app which notifies the customer if surge pricing applying at a certain period ends so that he can decide whether to wait and use the service when a lower fare becomes available or he is willing to pay a higher fare due to surge pricing. As such, should he be willing to work harder or longer on Friday and Saturday nights or during special holidays for the same payment? Should he pay more attention to the customer than his own family? Besides, Uber also fully understands its customers. Another important reason lies in the fact that Uber fully understands humans’ basic needs as each and every Uber driver is a human being, just like the passenger. It believes that the customer dissatisfaction is caused more by non-availability of Uber cars rather than by higher prices (fares) at a certain period. I nstead of retaining the existing price and informing the customer through the message in the app “No Cars Available”, Uber chooses to adhere to its promise given in the mission of rendering reliability and availability service to the customer. Nevertheless, these have posed not the slightest difficulty as regards its pricing strategy. ![]() Thus, in setting the price it must also give a detailed explanation to ensure customers’ thorough understanding. More importantly, Uber intends the customers to understand the service conditions and fees prior to actually using the service. In addition, Uber has defined its mission as low-price leader while having been considered as a luxury brand given the fact that in its early days the focus was on the selling of black car service which later was shifted to the new service known as UberX as a means to expand its customer group at a cheaper price than that offered by other general service providers. In other words, Uber business generates very minimal profit, just like in the case of Amazon. payment process management fee, customer service management fee, individual local authority’s supervisory fee, among others. The rest is used by Uber to compensate for variable costs incurred in the service provision, e.g. As Uber drivers, they receive 80% of the fare. Worse still, some also bypass Uber and have their own regular customers. They can freely decide at all times whether they are available for work or not. Uber drivers are independent of each other while some even work for other agencies. ![]() Uber’s marketplace business has to cope with a series of restrictions ranging from having no taxis/limousines of its own to zero driver employment. Given a fierce competition affecting both public transportation and various private logistics service providers in each country, Uber has become the topic of an interesting case study involving pricing in businesses that do not have assets of their own. In our previous article entitled “GrabTaxi and Uber Taxi: Examples of IT and Logistics Integration”, we touched on Uber’s marketplace business involving taxis and limousines via mobile application invading the market in many countries the world over. Simply put, nowhere in this world will you find quality products cheap, which leads to the big question inherent in each business: How can you be sure that the set price is a true reflection of the product/service? In many instances, consumers determine the product/service image from its price on the assumption that, when a brand sets high prices of its products/services, consumers will expect that the quality of products/services of that brand is higher than those of other brands. ![]() Thus, setting the right prices of products/services can speak well for the brand image while at the same timeimplying the product/service quality. The price is a key factor for conducting business covering both product selling and service provision as it is the key component of business that generates income. ![]()
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