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Why Uber Is More Expensive ... For Some People
Why Uber Is More Expensive ... For Some People
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Untertitel (565)
0:01
These 11 people are calling an Uber X
0:03
from our office in lower Manhattan to
0:05
the Plaza Hotel. Same ride at the exact
0:09
same time.
0:10
>> 6627
0:12
>> $64.96. Ren says 54.95.
0:16
>> What? That's
0:17
>> for Uber X for Uber X.
0:19
>> Wow. The highest fair was nearly 21%
0:23
more expensive [music] than the lowest
0:25
fair. We're all just sitting in the same
0:27
room and you're going to give different
0:28
[music] prices. Like, is there a reason
0:30
they're getting more expensive? One.
0:32
>> This report on Uber and Lyft found
0:34
routes that are over 50% more expensive.
0:37
So, what's going on?
0:39
>> The same product or service, different
0:41
prices for different consumers.
0:43
>> They have access to tons of data about
0:46
you, about people like you. It's safe to
0:49
say they can use those indicators to
0:52
adjust prices in ways that they think
0:54
will be more profitable for the company.
0:57
Uber says it doesn't use personal data
0:59
to personalize prices. But what we found
1:02
is that Uber's patents and a certain
1:04
inapp disclosure raise questions.
1:07
>> It is a bait and switch, right? Like,
1:09
hey, take this Uber ride and it's only
1:12
going to cost you 10 bucks. And then
1:15
three years later, Uber says, "Hey, now
1:17
now that actually cost you $60 and like
1:20
you're stuck."
1:23
>> You'd think with higher prices, drivers
1:25
would be making more.
1:26
>> When it first started, [music] I think
1:28
it was 7525 split, 75 for the driver,
1:32
but lately I've seen below 50%, which I
1:35
never saw before. So, is Uber setting a
1:38
different price just for you? And is
1:41
that the reason why some Uber rides are
1:43
so expensive?
1:48
In the early days, while Uber didn't
1:50
show you the price of a ride right away,
1:52
it [music] did promise a bargain. Uber X
1:55
cheaper than a taxi. The low prices
1:58
helped bring riders onto the app. More
2:00
riders attracted more drivers. They
2:02
needed a decent percentage of consumers
2:05
and drivers on their platform. And if
2:08
they captured enough of that, the idea
2:10
would be that for consumers or the
2:13
drivers to leave Uber would be very
2:15
costly. For many Uber drivers, [music]
2:18
the deal was simple. Keep 80% of the
2:20
fair while Uber took 20%. And that
2:23
strategy paid off. By 2013, Uber
2:26
expanded [music] to more than 60 cities
2:28
worldwide and was valued at around $3.5
2:31
[music] billion. But making that bargain
2:34
possible and scaling it fast meant Uber
2:36
was willing to lose money.
2:38
>> They were taking their venture capital
2:40
financing and whatever other financing
2:41
they were raising [music] and they were
2:44
letting the core of their business
2:46
operate at a loss. At the time, Uber
2:49
priced rides using a rate card that
2:51
followed a pretty simple formula, a base
2:53
charge plus a fixed rate per minute and
2:56
per mile. Think of it like a digital
2:59
taxi meter. And who could forget when
3:01
Uber introduced surge pricing? When
3:04
demand outpaced the number of available
3:06
drivers, Uber multiplied the fair. Surge
3:09
pricing didn't always sit well with
3:11
riders. In fact, it sparked backlash,
3:13
like in 2012 when Uber charged over $100
3:17
for rides less than 3 m on New Year's
3:19
Eve. But drivers actually love surge
3:22
pricing.
3:23
>> Well, if there were no surges, I
3:25
wouldn't even drive. I would quit
3:27
driving Uber. the surges is when I make
3:30
a lot of money.
3:31
>> But even with surge pricing, Uber wasn't
3:34
profitable. In 2017, the company
3:36
reported a net loss of $4.5 billion.
3:41
That year, Darra [music] Kaswas Shahi
3:43
stepped in as CEO to clean up Uber's
3:45
image and [music] financial situation.
3:48
Uber was in a tough spot in the sense
3:50
that again, they had not been profitable
3:52
ever. They had troubles in the EU,
3:54
London, France, and they had their
3:57
investments in self-driving cars, but
3:59
which clearly were not going to pay off
4:01
anytime soon. That was the problem.
4:04
Their core business wasn't profitable.
4:08
Going public in 2019 put Uber's finances
4:11
under closer scrutiny. At the time, the
4:13
company had accumulated a deficit
4:15
[music] of nearly $9 billion.
4:18
In 2022, Uber was still reporting major
4:20
losses and its stock was worth less than
4:23
half its initial public offering price.
4:26
The pressure was mounting on Kashahi to
4:28
prove Uber could finally turn growth
4:30
into profit.
4:35
In 2022, Uber began aggressively
4:38
expanding upfront pricing, [music] a
4:40
pricing model it had been quietly
4:41
testing since 2014, not just for riders,
4:44
but for drivers as well. Under upfront
4:47
pricing, fairs and driver pay moved away
4:50
from the predictable formula of time and
4:53
distance with the occasional surge.
4:55
>> Upfront pricing gets rid of all that and
4:58
they say, "Here's the price. Here's the
5:01
payout. Take it or leave it. That's it."
5:04
>> It's nice to know the price you're
5:06
paying and what the driver would be
5:08
earning ahead of time, but it all
5:10
becomes much more variable for everyone,
5:13
[music] right? Seems they're not using a
5:14
ray card anymore.
5:16
So, how does Uber calculate the fairs if
5:18
it no longer uses the rate card? Uber
5:21
says many data points, including [music]
5:23
the estimated trip time, distance from
5:26
origin to destination, time of day,
5:29
route, and demand patterns. It [music]
5:31
also includes tolls, taxes, search
5:33
charges, and fees.
5:36
All of this indicates that Uber [music]
5:38
is basing the price on the ride and
5:40
marketplace conditions. But two reports
5:43
say that upfront pricing quietly uses AI
5:46
to get more money out of you.
5:48
This analysis from 2025 [music]
5:50
found that upfront pricing allows Uber
5:53
to separately estimate the closest
5:55
maximum each consumer might be willing
5:57
to pay for a given trip and minimum any
6:00
nearby driver might be willing to
6:02
accept. The author Lynn Sherman of
6:05
Columbia Business School calls that
6:07
algorithmic price discrimination.
6:10
Algorithmic price discrimination just
6:12
means maximizing prices and minimizing
6:16
costs using data and algorithms, right?
6:19
So, it sort of supercharges that process
6:22
because if you have a ton of data and
6:25
you have good ideas about how people
6:27
behave, I think what Len Sherman would
6:30
say is Uber does it better than anyone
6:34
else. It's not personal surveillance
6:37
maybe so much as it is they have all
6:39
this data on a bunch of people like you
6:42
or people who have certain similar
6:44
habits and so you know if we send that
6:49
group of people a specific price you're
6:50
likely to respond to that in a certain
6:52
way.
6:54
>> Uber flatly denies personalizing prices
6:57
[music] or as critics call it
6:59
>> surveillance [snorts]
6:59
pricing.
7:00
>> Surveillance pricing.
7:01
>> It is called surveillance pricing. But
7:04
the company does say it may use personal
7:06
data to tailor promotions and discounts.
7:09
And if you take a closer look at Uber's
7:12
own messaging, it gets a little
7:13
complicated. If you're in New York and
7:16
you open the Uber app, keep scrolling to
7:18
the very bottom of your quote and you
7:20
may find this sentence. This price was
7:23
set by an algorithm using your personal
7:25
data. Uber has to show you that because
7:28
New York law requires companies to
7:30
disclose when personal data is used to
7:33
help set your price. And in digging a
7:35
little deeper into Uber's documents,
7:37
Uber patents detail just how much your
7:40
phone can potentially reveal.
7:42
One patent describes how Uber's machine
7:45
learning system could track tapping
7:47
accuracy, typing speed, the angle of
7:50
your phone, and even your [music]
7:51
walking speed, and compare those signals
7:54
with your past behavior. Another patent
7:57
shows how much Uber can predict from
7:59
your ride history, stating, "A rider
8:01
that routinely inputs a dropoff location
8:04
approximate to a [music] daycare center
8:06
or school before proceeding to a
8:08
professional building can be readily
8:10
identified as a single working parent.
8:13
The age and gender or sex of the rider
8:15
can further be determined through
8:17
[music] analysis of the ride history
8:18
data."
8:20
These patents show how advanced Uber's
8:22
tech might be. Uber told us over email
8:25
that these patents [music] do not
8:26
establish present or past use and
8:28
neither patent relates to pricing. As
8:31
for the inapp disclosure, Uber said that
8:33
it only uses writers [music] locations
8:36
which count as personal data under New
8:38
York's disclosure law.
8:42
To test what's going on, we asked our
8:44
colleagues to request the same ride at
8:46
[music] the exact same time. Same
8:48
pickup, same destination, same route.
8:51
First, we had riders request a car from
8:54
Business Insiders [music]
8:55
offices in lower Manhattan to John F.
8:57
Kennedy Airport, Terminal 4, Delta
8:59
Airlines.
9:00
>> $149.51
9:03
>> $149.50
9:06
$149.50
9:07
cheated on 150 cents.
9:11
>> $14647
9:13
Whoa.
9:14
>> The price increase between Shannon and
9:16
Abby, who received the most expensive
9:18
[music] and cheapest quotes, was only
9:20
2.48%. 48%.
9:22
But if we go back to our results from
9:24
the beginning of the video, from the
9:25
office [music] to the Plaza Hotel, we
9:27
found a 20.6% price increase between
9:30
Amanda and Adam's quotes. The colleagues
9:34
we spoke to were puzzled and frustrated
9:36
by the range of prices for the same
9:39
ride.
9:40
Like I understand if it's raining or if
9:43
there's not enough cars, sure you can
9:45
charge extra, but like we're all just
9:47
sitting in the same room and you're
9:49
going to give different prices. Like
9:51
why? I was a little annoyed. Like
9:53
obviously they don't know that we're
9:54
seeing everybody else's prices, but like
9:56
like what did I do wrong?
9:58
>> $6.95.
9:59
>> They're not the only ones asking
10:00
questions.
10:02
>> Okay, Uber is getting out of hand.
10:04
>> That is surveillance pricing. The same
10:06
product or service, different prices for
10:08
different consumers.
10:10
Keep in mind our experiment was limited
10:12
in scope. When we asked Uber about our
10:14
results, they blamed imprecise GPS,
10:17
saying a ride from one Liberty Street
10:19
and OE Liberty Street could result in
10:21
different fairs. Even small differences
10:24
in pickup location, they said can change
10:26
route and the estimated price. But
10:29
Consumer Reports found similar results
10:31
with a much bigger sample. That report
10:34
had over 170 volunteers compare price
10:36
quotes from Uber and Lyft, checking the
10:39
same routes at nearly the same time.
10:41
Some routes had [music] a median gap of
10:43
50% between the highest and lowest
10:45
prices. Lyft didn't respond to our
10:48
request for comment, but in an official
10:50
statement, Uber said Consumer Reports
10:52
findings were based on flawed
10:54
methodology and added over email that
10:56
they rely on comparing discounted
10:58
prices. Consumer Reports also doesn't
11:01
dispute Uber's claim that it doesn't use
11:04
personal data. Ultimately, we don't know
11:06
what precise data is used to calculate
11:08
[music] your fair or how the algorithms
11:11
are working in a given ride. That's sort
11:13
of the issue with upfront pricing. How
11:16
it works is unclear. As the rider, I
11:19
know how much I'll pay for a ride, and
11:21
as the driver, I do know how much I'm
11:23
getting. But how that was calculated is
11:26
usually a mystery. It's just a black
11:28
box. It still feels like a black box.
11:31
>> What we do know is that prices have
11:33
gotten more expensive. Uber rolled out
11:36
upfront [music] pricing to regular Uber
11:38
X riders in 2016. In the years that
11:41
followed, [music] average fair soared by
11:43
83% from 2018 to 2022, nearly four times
11:47
the annual rate of inflation. It's a far
11:50
cry from the cheaper rides of Uber's
11:52
early days. Uber told us that the figure
11:54
does not account for more recent data.
11:57
The 2018 to 2022 numbers we provided are
12:00
the only publicly available nationwide
12:02
data set based solely on Uber fairs. And
12:05
Uber did not provide us with updated
12:07
pricing data. But the company doesn't
12:09
dispute that fairs have risen
12:11
significantly and cites inflation,
12:13
higher fees and costs and a
12:15
post-pandemic driver shortage among the
12:17
reasons why.
12:18
>> It is a bait and switch, right? like,
12:20
"Hey, take this Uber ride and it's only
12:23
going to cost you 10 bucks." And then
12:25
[music] 3 years later, Uber says, "Hey,
12:27
now now that actually cost you $60 and
12:30
like you're stuck."
12:34
That switch up had a big impact on
12:36
Uber's bottom line. In 2023, Uber
12:39
reported its first ever annual profit of
12:41
$1.1 billion.
12:44
I think it's fair to say that upfront
12:46
pricing is the secret to their
12:49
turnaround. And upfront pricing may be
12:51
the [music] secret to Uber becoming
12:53
profitable as a company. Remember that
12:56
2022 low? 3 years later, Uber's stock
12:59
price had more than quadrupled, and the
13:01
company continues to break its own
13:03
records for profit and cash [music]
13:04
flow.
13:07
While riders feel the price shift,
13:09
drivers are also feeling squeezed
13:10
[music] by Uber's turn to upfront
13:12
pricing.
13:16
Let's go back to the findings from Lynn
13:18
Sherman we touched on earlier. In
13:20
addition to maximizing rider price, the
13:22
analysis [music] also says Uber finds
13:24
the closest minimum any nearby driver
13:27
might be willing to accept.
13:29
We got to see this firsthand with Levi,
13:32
an Uber [music] driver in Syracuse, New
13:34
York, when our producer Margaret booked
13:36
a ride with him from Kazanovia to
13:38
Syracuse.
13:39
>> Hi, Margaret.
13:40
>> Hey, Levi.
13:42
The price she paid was $70.52.
13:45
What did Levi earn?
13:47
>> That's how much I made. So, the upfront
13:49
fair when I accepted it was $25.
13:53
How much did you pay?
13:55
>> Wow.
13:56
>> He also told us he only has a matter of
13:58
seconds to decide whether a trip is
14:00
worth the upfront price he's offered.
14:03
>> There you go. So, look, 10-minute ride.
14:05
So, it's five and five. Okay. So, that
14:07
ride was 475. 10 minutes.
14:11
um minus 2 and a half miles of expenses.
14:14
So my my cost per mile is 30 cents per
14:18
mile. So that's
14:21
70
14:22
say 75 cents in cost. So the ride paid
14:25
475. So that's a $4 in profitability.
14:28
Divide that over 10 minutes worth of
14:30
work. So that's
14:35
gosh, I don't know. See, I was say I
14:37
can't figure it out that fast before.
14:40
So, I don't know. It's not worth it. I
14:42
could tell you that [laughter] wasn't a
14:43
worth it ride.
14:45
>> Now, you have like 5 seconds. So, they
14:48
know I'm driving and they're hoping I
14:50
won't realize how bad the ride is and
14:51
take it. Bill Lewis has been driving for
14:54
Uber since 2017 and has nearly 40,000
14:58
rides under his belt. He told us he's
15:01
witnessed how upfront pricing has
15:03
changed what drivers earn.
15:05
When they in instituted upfront pricing,
15:09
they now tell you the price, they tell
15:11
you the pickup location, and they tell
15:13
you where you're going. But for that,
15:16
they feel like they deserve never
15:18
[music]
15:18
to pay us anymore, right?
15:21
You'd think as a driver, the way to make
15:24
the most amount of money is by being a
15:26
good driver, by being safe, reliable,
15:29
having a clean car. No. The way you make
15:33
money is by playing the game.
15:36
And the game is it's a numbers game.
15:40
>> Bill and Levi aren't the only ones
15:43
feeling squeezed.
15:44
>> We pay gas. We fix the car. WE PAY
15:48
INSURANCE.
15:49
>> THEY'RE CHARGING THE PASSENGERS $50,
15:51
$60.
15:52
>> THEY KNOW WHAT I'M PAYING.
15:54
>> WE are tired and frustrated.
15:55
>> We have nothing.
15:58
Uber says individual driver behavior
16:00
doesn't factor into fairs and is instead
16:02
based on marketplace conditions for the
16:05
requested route. But on the company's Q4
16:07
2023 earnings call, Uber CEO said,
16:11
>> "I think that what we can do better is
16:13
actually targeting different trips to
16:16
different drivers based on their
16:17
preferences or based on behavioral
16:20
patterns uh that they're showing us.
16:23
That really is the focus going forward,
16:25
offering the right trip at the right
16:27
price to the right driver.
16:31
When we asked Uber about this quote from
16:33
its CEO, the company said matching
16:35
drivers to specific trips is designed to
16:38
reduce downtime for drivers while
16:40
decreasing weight time for riders.
16:43
Multiple studies and the drivers we
16:45
talked to say [music] the same thing.
16:47
With a widening gap between rider prices
16:49
and driver wages, Uber's take rate is
16:52
increasing under its upfront pricing
16:54
model.
16:57
Take rate is the percentage the company
17:00
keeps from all the rides it facilitates.
17:02
Critics say that under the upfront
17:04
pricing model, that share has been
17:06
climbing.
17:07
>> Len Sherman found a few things. Overall,
17:10
he found that it's gotten harder for a
17:12
lot of drivers to make money under
17:14
upfront pricing. He also found that Uber
17:18
increased its take rate. [music] These
17:20
days, you know, it goes the high 20s,
17:22
the 30s, even as high as 50% in some
17:24
cases.
17:26
During our ride along with Levi, he
17:28
earned $27.31, [music]
17:31
which was 39% of the ride's initial cost
17:34
without Margaret's tip. I would have at
17:36
least
17:38
generously thought you were getting like
17:41
$50, maybe like 45 [music]
17:44
or something like that would be what I
17:46
would be assuming.
17:47
>> Meanwhile, Uber share of a single ride
17:49
or the service fee is $21.29. [music]
17:53
That's 30% of the ride. Levi showed us
17:55
that Uber also took a cut from the wait
17:58
time fee.
17:59
>> For wait time, I paid 56. [music]
18:01
>> See, I got paid 37 cents.
18:04
How was that?
18:05
>> I I'm the one that did the waiting.
18:09
[laughter]
18:09
>> It's like why why is Uber making money
18:12
on the wait time?
18:14
Levi's [music] experience is just one
18:16
data point, but it does echo findings
18:18
from much larger studies. A 2025 study
18:21
of 258 drivers [music] found that
18:23
upfront pricing enabled Uber to increase
18:26
its median cut from 25% to 29% and
18:30
sometimes to over 50% in [music] the UK.
18:33
And in Lynn Sherman's latest analysis of
18:35
roughly 50,000 trips by three veteran
18:38
drivers, he found that his measure of
18:40
Uber's average take [music] rate
18:41
exceeded 50% for each driver in 2026.
18:46
Uber denies that its take rates have
18:48
increased. The company blames those
18:50
outside costs, especially the
18:52
everinccreasing cost of ensuring trips
18:54
[music] booked through Uber as the main
18:56
reason riders pay more than drivers
18:58
receive. On Levi's end, he can see that
19:01
on his receipt as part of commercial
19:03
auto insurance, which ended up being
19:06
$15.78
19:07
or a 22% cut of the ride. And at the top
19:11
of Margaret's receipt, she even received
19:13
a warning of just how much
19:14
governmentmandated insurance costs have
19:16
gone up nowadays. But when [music] Levi,
19:19
who's a former accountant, took a closer
19:21
look at the numbers, he was more
19:23
confused by Uber's explanations.
19:25
Levi tracked his numbers over a 2-year
19:28
period.
19:29
I got [music] the same ride from Ithaca,
19:32
New York to Syracuse airport, and the
19:36
commercial auto insurance fluctuated
19:37
from $15 for that ride to $50 for that
19:42
ride. And you'd think that the
19:44
commercial auto insurance would be tied
19:47
to
19:50
um,
19:52
you know, cost per mile or something.
19:54
You know what I mean? Something logical.
19:56
But no, it was just it was a random
19:58
number. I I'd like to think as an
20:00
accountant I could understand it, but I
20:02
don't.
20:03
>> Lynn Sherman also crunched Levi's
20:05
numbers and found that the massive
20:07
fluctuations [music]
20:07
in Uber's insurance and operational fees
20:10
were statistically unrelated to [music]
20:12
the time or day of the trip. I equate it
20:16
to going to a casino. That's what being
20:20
an Uber driver is like. [music] And you
20:22
could tell by my reaction. There are
20:25
times I'm winning big and then [music]
20:27
there are times you go into the casino
20:29
and you can't win. You keep losing
20:32
money.
20:34
That's what being [music] an Uber driver
20:36
is like with upfront fairs.
20:43
Today, upfront pricing has become the
20:45
standard across ride share and delivery
20:47
apps. By October 2022, Lyft expanded
20:51
upfront pay for drivers across nearly 70
20:53
markets nationwide. Two years later,
20:56
Lyft reported its [music] first annual
20:58
net profit, nearly $23 million.
21:02
>> Other companies like Instacart and Door
21:04
Dash might [music] not use the term
21:06
upfront pricing, but when you look at
21:08
payouts, for instance, for delivery
21:10
drivers, they vary in a similar way. I
21:15
think it's fair to say that Uber
21:16
pioneered upfront pricing. There's no
21:19
doubt about that. Not just for the whole
21:21
gig economy, but really they pioneered a
21:24
model that is being used and exported to
21:26
other industries.
21:28
For riders and drivers who navigate
21:31
these algorithms every day, the shift
21:33
has cost them something harder to
21:35
measure. Trust.
21:37
>> We just want to be respected and be
21:40
treated fairly, like I said. And they're
21:42
not going to do it. We need help. I
21:44
always figured if you work hard and you
21:46
do the right thing, it will work out.
21:48
But when you're up against such a big
21:50
conglomerate that could care [music]
21:52
less what you do for them, it's tough.
21:56
It is cold. It's indifferent. [music]
21:58
It's It feels manipulative by an
22:01
algorithm, not like a company that wants
22:05
to help you [music] succeed.
22:08
Dra, if you see this video, I like being
22:13
an Uber driver. [music] I really do. I
22:16
like meeting the people. I like the
22:17
flexibility.
22:19
I think the biggest challenge that you
22:22
have [music] as a company is that nobody
22:24
trusts you. Well, I have no problem with
22:27
Uber [music] making money at any point.
22:29
I have a problem with Uber making money
22:31
off of asymmetric information.
