You might all notice the uber price changes all the time. Earlier this month there was a storm when I tried to go to a restaurant, I saw the price almost tripled, so the dinner was cancelled… I wondered how Uber calculated the price?
1. Basic price calculation
Well, I don’t know how the price is set in the first place. Maybe the oil used, the cost of the vehicle spreading out for years and labour. I learned from my last google research[1] and I know this is called cost-based strategy. We can use a competitor-based strategy then. So I googled the taxi rate. The base fee is $2.9 and $2.14 per kilometre, so for 10 km is $24.3. Well, Uber is cheaper, sort of around $20. However, $20 is not peak hour; it could be tripled, as I mentioned above.
The price is dynamic based on the demand-supply in specific areas. Higher price can attract more drivers into this area, or decrease customers who might shift to public transportation. I believe their model has a basic…
