Uber Technologies has announced that the company will drop prices in more than 100 cities in the United States and Canada, with many of the fare reductions starting on Saturday. The price cuts will vary by region, with some areas getting bigger discounts than others. Prices in Houston will be cut by 20 percent. Richmond, Virginia will see prices cut by 15 percent. Los Angeles and San Francisco will see 10 percent price cuts. Prices in some cities, including New York and Chicago, will remain unchanged for now.
It’s not often that you hear of Uber prices going down. The ride-hailing company hopes the move will increase demand in a seasonally slow month. January is typically a slow month for ride-sharing services. People tend to stay inside and avoid going out more than absolutely necessary. The price decrease aims to convince more people to get out of the house during the winter weather. Uber also cut prices in January of 2014 and 2015.
Uber has not set a specific date for when the promotion will expire. The new prices for rides will be in effect indefinitely, but Uber reserves the right to reverse them at any time. Previous price decreases only lasted for a couple of weeks, and many are anticipating the same this time.
The new price cuts for rides may also help Uber gain goodwill back from disgruntled customers who entered the New Year angry at the company. On New Year’s Eve, Uber spiked ride prices up to several times their normal rate under their surge pricing system. Numerous riders who were depending on the service to get them home from New Year’s Eve celebrations got a big and unpleasant surprise. Some were left scrambling for alternative means of transportation.
Uber said that the lower fares will not have a negative impact on drivers’ earnings. Uber said lower fares will attract more riders, which should increase the number of trips per hour. In some places, Uber is guaranteeing earnings for drivers to ensure that no one is disadvantaged. If total fares per hour fall below a certain average, the company will make up the difference. Uber is doing this to stabilize driver’s earnings while the price cuts kick in.