If there’s one thing you can legitimately knock Uber for, it’s that the service is still too expensive for most people to use on a regular basis. Taxis, for all their problems, are still significantly cheaper. But not tomorrow.
Tomorrow, all San Francisco-based taxis are set to go on strike. They’ll be circling City Hall all day in hopes of a better deal from the city. Smartly, Uber is going to take full advantage of this. Starting tomorrow at 4 AM until midnight the following day, all Uber fares will be 50 percent off. Yes, half off. “ALL UBER TRIPS WILL BE AT TAXI PRICES,” is how Uber puts it in a message to customers.
How on Earth does this work economically for Uber? Two ways. First, they’ve asked their drivers to take a one-day pay cut. Second, Uber itself will be giving their cut of the revenues on that day back to the drivers to help make up the difference. In other words, it doesn’t work economically for Uber. Still, smart marketing, smart execution.
“It’s an interesting exercise. Classic economics says when you lower the price, that quantity of supply decreases. But classic economic models don’t account for the pride Uber and our driver partners take in being a viable transportation alternative in San Francisco, especially when San Franciscans need us most,” reads the message from Uber.
Uber also includes a note to the striking taxi drivers: we want you.
And if the strike continues any longer than one day, they’ll need them. Tomorrow, the biggest Uber problem won’t be the cost, it will be the need for about 200 more Uber cars on the streets.
It will be interesting to see what the city of San Francisco and the taxi services think about Uber’s move here. They’ve been at odds for months now. Those 20,000 years of jail time might get jacked up.