We had an interesting experience when we returned to Fort Smith recently from our six-week trip to Mexico, which we abruptly ended in four days. I may talk about that story some other time, but today's short note revolves around surge pricing.

Huh?

Yeah, surge pricing. It's also called demand or dynamic pricing which is increasingly used on consumers to adjust pricing depending on the market interest or demand at any given period of the buying process.

You may have experienced it when you searched for a product, hotel room or airline ticket to buy. One day you found a product for a price and decided to think about it for a day or so. When you came back to look at the product, you may have found that the price changed.

Or, more blatantly, when you research flights for a trip, the closer you get to the trip, the pricing starts going up. Prices may really go up if the seats on the flight are filling relatively quickly.

You're seeing dynamic pricing at work.

Fort Smith, Arkansas and the Uber Surge

Back to our trip. I would usually call in advance for a taxi to pick us up for $10, but that option was made less attractive when the taxi company went out of business. The new one is more aggressive in pricing (extra charge for each person, luggage is a charge, etc.).

So, I figured, just use Uber. We took Uber to the airport for our departure a few days earlier and it cost around 13 bucks.

After arriving at the gate, I kicked off airplane mode and checked the app. I am stunned to find that the 10 minute trip to our house will cost $56! The "luxury" vehicle was something like $113. 

I just had to chuckle as I realized what was happening. So, I said to my wife that we're at war with Uber and we need to get our bag and go sit for awhile as the game is on for our fare.

After all, this is Fort Smith. I don't think there were more than two or three Uber prospects on the flight - that just isn't how it works here. There was a business person or two picking up their rental cars. Everyone else had a ride.

So, after that surge of Uber customers failed to materialize, the prices started to drop.... fast. $47... 43... 37... by the minute its dropping. Within 20 minutes of our flight arrival at the gate prices had dropped to $20. I was tempted, but I closed the app and checked again in another minute - $15 something. Clicked Accept, and we went home.

Uber Driver

I asked our driver what he knew about the big Uber surge pricing scheme and he was just as surprised as I was by the pricing offers I told him about. He said a few of the drivers were all holed up a half mile away waiting to be called up.... and only one other driver had gotten a call before ours.

He said he saw the surge notice pop up, but it rather quickly disappeared. He also questioned whether he was getting his share of any such pricing premiums. 

One other thing he stated was that there were too many new people signing up for these apps in recent weeks and driving down driver income. He said that he now has to work Uber, Lyft and Door Dash to make the same money he used to make driving Uber alone.

Moral of the Story

Be patient when you're trapped, if possible - the predator will get more realistic with the price the longer you wait. That advice assumes the demand is temporary, of course. In a Fort Smith, you don't have to wait long.

With flights or hotels, book early. Also, consider using different locations (coffee shop) to do your initial research, or different devices (cell service vs your internet provider), and/or a VPN service to obscure your location, which helps to throw off algorithms used in this increasingly pervasive pricing technique.

It's a war out there, folks!

Kermit