Uber is using strategic pricing to earn more money in wealthier areas

Ride-hailing service Uber is embracing a new pricing strategy. The company is “charging what it thinks you’re willing to pay,” Eric Newcomer reports for Bloomberg. Previously, Uber calculated fares based on mileage, time, and the supply-demand balance. Now, a pilot program in 14 cities is adjusting fares based on where people are going – not just how far away it is. Bloomberg cites an example in which someone traveling between wealthy parts of town might be asked to pay more than someone taking an equivalent ride to a poorer neighborhood. The change is part of a broader movement toward “strategic pricing,” in which companies dynamically change prices based on customers’ profiles.

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