- 21 hours ago
Uber once sold riders on a simple promise: Order a car right from your phone for less than a taxi. Since then, prices have risen dramatically.
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00:01These 11 people are calling an UberX from our office in Lower Manhattan to the Plaza Hotel.
00:07Same ride at the exact same time.
00:10$66.27.
00:12$64.96.
00:14Rental is $54.95.
00:16For UberX.
00:18For UberX.
00:19Wow.
00:20The highest fare was nearly 21% more expensive than the lowest fare.
00:25We're all just sitting in the same room and you're going to give different prices.
00:29Like, is there a reason they're getting a more expensive one?
00:32This report on Uber and Lyft found routes that are over 50% more expensive.
00:37So what's going on?
00:39The same product or service, different prices for different consumers.
00:43They have access to tons of data about you, about people like you.
00:48It's safe to say they can use those indicators to adjust prices in ways that they think will be more
00:55profitable for the company.
00:57Uber says it doesn't use personal data to personalize prices.
01:01But what we found is that Uber's patents and a certain in-app disclosure raise questions.
01:07It is a bait and switch, right?
01:09Like, hey, take this Uber ride and it's only going to cost you $10.
01:13And then three years later, Uber says, hey, now that actually cost you $60.
01:18And, like, you're stuck.
01:22You'd think with higher prices, drivers would be making more.
01:26When it first started, I think it was $75, $25 split.
01:30$75 for the driver.
01:32But lately I've seen below 50%, which I never saw before.
01:36So is Uber setting a different price just for you?
01:40And is that the reason why some Uber rides are so expensive?
01:47In the early days, while Uber didn't show you the price of a ride right away, it did promise a
01:53bargain.
01:54UberX cheaper than a taxi.
01:56The low prices helped bring riders onto the app.
01:59More riders attracted more drivers.
02:02They needed a decent percentage of consumers and drivers on their platform.
02:07And if they captured enough of that, the idea would be that for consumers or the drivers to leave Uber
02:14would be very costly.
02:16For many Uber drivers, the deal was simple.
02:19Keep 80% of the fare, while Uber took 20%.
02:22And that strategy paid off.
02:24By 2013, Uber expanded to more than 60 cities worldwide and was valued at around $3.5 billion.
02:32But making that bargain possible and scaling it fast meant Uber was willing to lose money.
02:38They were taking their venture capital financing and whatever other financing they were raising,
02:42and they were letting the core of their business operate at a loss.
02:47At the time, Uber priced rides using a rate card that followed a pretty simple formula.
02:52A base charge plus a fixed rate per minute and per mile.
02:57Think of it like a digital taxi meter.
02:59And who could forget when Uber introduced surge pricing?
03:03When demand outpaced the number of available drivers, Uber multiplied the fare.
03:09Surge pricing didn't always sit well with riders.
03:11In fact, it sparked backlash, like in 2012 when Uber charged over $100 for rides less than three miles on
03:19New Year's Eve.
03:20But drivers actually love surge pricing.
03:23Well, if there were no surges, I wouldn't even drive.
03:26I would quit driving Uber.
03:28The surge is when I make a lot of money.
03:30But even with surge pricing, Uber wasn't profitable.
03:34In 2017, the company reported a net loss of $4.5 billion.
03:40That year, Dara Khosrowshahi stepped in as CEO to clean up Uber's image and financial situation.
03:48Uber was in a tough spot in the sense that, again, they had not been profitable ever.
03:53They had troubles in the EU, London, France.
03:56And they had their investments in self-driving cars, which clearly were not going to pay off anytime soon.
04:02That was the problem.
04:04Their core business wasn't profitable.
04:07Going public in 2019 put Uber's finances under closer scrutiny.
04:12At the time, the company had accumulated a deficit of nearly $9 billion.
04:17In 2022, Uber was still reporting major losses.
04:21And its stock was worth less than half its initial public offering price.
04:26The pressure was mounting on Khosrowshahi to prove Uber could finally turn growth into profit.
04:34In 2022, Uber began aggressively expanding upfront pricing.
04:39A pricing model it had been quietly testing since 2014.
04:43Not just for riders, but for drivers as well.
04:46Under upfront pricing, fares and driver pay moved away from the predictable formula of time and distance with the occasional
04:54surge.
04:55Upfront pricing gets rid of all that.
04:58And they say, here's the price.
05:00Here's the payout.
05:02Take it or leave it.
05:03That's it.
05:04It's nice to know the price you're paying and what the driver would be earning ahead of time.
05:09But...
05:10It all becomes much more variable for everyone, right?
05:13Seems they're not using a rate card anymore.
05:16So how does Uber calculate the fares if it no longer uses the rate card?
05:21Uber says many data points, including the estimated trip time, distance from origin to destination, time of day, route and
05:30demand patterns.
05:30It also includes tolls, taxes, surcharges and fees.
05:35All of this indicates that Uber is basing the price on the ride and marketplace conditions.
05:41But two reports say that upfront pricing quietly uses AI to get more money out of you.
05:48This analysis from 2025 found that upfront pricing allows Uber to separately estimate the closest maximum each consumer might be
05:57willing to pay for a given trip and minimum any nearby driver might be willing to accept.
06:03The author, Lynn Sherman of Columbia Business School, calls that algorithmic price discrimination.
06:10Algorithmic price discrimination just means maximizing prices and minimizing costs using data and algorithms, right?
06:19So it sort of supercharges that process because if you have a ton of data and you have good ideas
06:26about how people behave, I think what Len Sherman would say is Uber does it better than anyone else.
06:34It's not personal surveillance, maybe so much as it is they have all this data on a bunch of people
06:42like you or people who have certain similar habits.
06:45And so, you know, if we send that group of people a specific price, you're likely to respond to that
06:52in a certain way.
06:54Uber flatly denies personalizing prices or as critics call it.
06:59Surveillance pricing.
07:00Surveillance pricing.
07:01It is called surveillance pricing.
07:03But the company does say it may use personal data to tailor promotions and discounts.
07:09And if you take a closer look at Uber's own messaging, it gets a little complicated.
07:14If you're in New York and you open the Uber app, keep scrolling to the very bottom of your quote
07:19and you may find this sentence.
07:22This price was set by an algorithm using your personal data.
07:26Uber has to show you that because New York law requires companies to disclose when personal data is used to
07:33help set your price.
07:34And in digging a little deeper into Uber's documents, Uber patents detail just how much your phone can potentially reveal.
07:42One patent describes how Uber's machine learning system could track tapping accuracy, typing speed, the angle of your phone, and
07:51even your walking speed, and compare those signals with your past behavior.
07:55Another patent shows how much Uber can predict from your ride history, stating a rider that routinely inputs a drop
08:03-off location proximate to a daycare center or school before proceeding to a professional building can be readily identified as
08:11a single working parent.
08:12The age and gender or sex of the rider can further be determined through analysis of the ride history data.
08:19These patents show how advanced Uber's tech might be.
08:23Uber told us over email that these patents do not establish present or past use and neither patent relates to
08:29pricing.
08:31As for the in-app disclosure, Uber said that it only uses riders' locations, which count as personal data under
08:37New York's disclosure law.
08:41To test what's going on, we asked our colleagues to request the same ride at the exact same time.
08:48Same pickup, same destination, same route.
08:51First, we had riders request a car from Business Insider's offices in Lower Manhattan to John F. Kennedy Airport, Terminal
08:584, Delta Airlines.
09:00$149.51.
09:03$149.50.
09:06$149.50.
09:08$149.50.
09:11$146.47.
09:13Whoa!
09:14The price increase between Shannon and Abby, who received the most expensive and cheapest quotes, was only 2.48%.
09:22But if we go back to our results from the beginning of the video, from the office to the Plaza
09:26Hotel, we found a 20.6% price increase between Amanda and Adam's quotes.
09:33The colleagues we spoke to were puzzled and frustrated by the range of prices for the same ride.
09:40Like, I understand if it's raining or if there's not enough cars, sure, you can charge extra.
09:46But like, if we're all just sitting in the same room and you're going to give different prices, like, why?
09:51I was a little annoyed.
09:53Like, obviously they don't know that we're seeing everybody else's prices, but I'm like, what did I do wrong?
09:58They're not the only ones asking questions.
10:01Okay, Uber is getting out of hand.
10:04That is surveillance pricing.
10:06The same product or service, different prices for different consumers.
10:09Keep in mind, our experiment was limited in scope.
10:12When we asked Uber about our results, they blamed imprecise GPS saying a ride from 1 Liberty Street and ONE
10:20Liberty Street could result in different fares.
10:22Even small differences in pickup location, they said, can change route and the estimated price.
10:28But consumer reports found similar results with a much bigger sample.
10:33That report had over 170 volunteers compare price quotes from Uber and Lyft, checking the same routes at nearly the
10:40same time.
10:41Some routes had a median gap of 50% between the highest and lowest prices.
10:47Lyft didn't respond to our request for comment, but in an official statement, Uber said Consumer Reports' findings were based
10:53on flawed methodology,
10:55and added over email that they rely on comparing discounted prices.
10:59Consumer Reports also doesn't dispute Uber's claim that it doesn't use personal data.
11:05Ultimately, we don't know what precise data is used to calculate your fare,
11:09or how the algorithms are working in a given ride.
11:13That's sort of the issue with upfront pricing.
11:15How it works is unclear.
11:17As the rider, I know how much I'll pay for a ride.
11:21And as the driver, I do know how much I'm getting.
11:23But how that was calculated is usually a mystery.
11:27It's just a black box.
11:28It still feels like a black box.
11:31What we do know is that prices have gotten more expensive.
11:35Uber rolled out upfront pricing to regular UberX riders in 2016.
11:40In the years that followed, average fare soared by 83% from 2018 to 2022, nearly four times the annual
11:48rate of inflation.
11:49It's a far cry from the cheaper rides of Uber's early days.
11:53Uber told us that the figure does not account for more recent data.
11:57The 2018 to 2022 numbers we provided are the only publicly available nationwide data set based solely on Uber fares.
12:04And Uber did not provide us with updated pricing data.
12:07But the company doesn't dispute that fares have risen significantly and cites inflation, higher fees and costs, and a post
12:15-pandemic driver shortage among the reasons why.
12:18It is a bait and switch, right?
12:19Like, hey, take this Uber ride and it's only going to cost you 10 bucks.
12:24And then three years later, Uber says, hey, now that actually costs you $60.
12:29And, like, you're stuck.
12:33That switch up had a big impact on Uber's bottom line.
12:37In 2023, Uber reported its first-ever annual profit of $1.1 billion.
12:43I think it's fair to say that upfront pricing is the secret to their turnaround.
12:50And upfront pricing may be the secret to Uber becoming profitable as a company.
12:55Remember that 2022 low?
12:57Three years later, Uber's stock price had more than quadrupled.
13:01And the company continues to break its own records for profit and cash flow.
13:06While riders feel the price shift, drivers are also feeling squeezed by Uber's turn to upfront pricing.
13:16Let's go back to the findings from Lynn Sherman we touched on earlier.
13:19In addition to maximizing rider price, the analysis also says Uber finds the closest minimum any nearby driver might be
13:27willing to accept.
13:29We got to see this firsthand with Levi, an Uber driver in Syracuse, New York, when our producer Margaret booked
13:36a ride with him from Casanovia to Syracuse.
13:38Hi, Margaret.
13:40Hey, Levi.
13:41The price she paid was $70.52.
13:45What did Levi earn?
13:46That's how much I made.
13:48So the upfront fare, when I accepted it, was $25.
13:53How much did you pay?
13:54Wow.
13:56He also told us he only has a matter of seconds to decide whether a trip is worth the upfront
14:01price he's offered.
14:03There you go.
14:04So look.
14:0510 minute ride.
14:05So it's five and five.
14:07Okay.
14:07So that ride was $4.75.
14:0910 minutes.
14:11Minus two and a half miles of expenses.
14:15So my cost per mile is 30 cents per mile.
14:19So that's 70, say 75 cents in cost.
14:24So the ride paid $4.75.
14:25So that's a $4 in profitability.
14:28Divide that over 10 minutes worth of work.
14:32So that's, oh gosh, I don't know.
14:36See, I'm supposed to say, I can't figure it out that fast before.
14:40So, I don't know.
14:41It's not worth it.
14:42I could tell you that wasn't worth it.
14:45Now you have like five seconds.
14:47So they know I'm driving and they're hoping I won't realize how bad the ride is and take it.
14:53Bill Lewis has been driving for Uber since 2017 and has nearly 40,000 rides under his belt.
14:59He told us he's witnessed how upfront pricing has changed what drivers earn.
15:05When they instituted upfront pricing, they now tell you the price.
15:10They tell you the pickup location and they tell you where you're going.
15:14But for that, they feel like they deserve never to pay us anymore, right?
15:21You think, as a driver, the way to make the most amount of money is by being a good driver.
15:27By being safe, reliable, having a clean car.
15:30No.
15:32The way you make money is by playing the game.
15:36And the game, it's a numbers game.
15:40Bill and Levi aren't the only ones feeling squeezed.
15:43We pay gas.
15:45We fix the car.
15:47We pay insurance.
15:49The charge of the passengers is $50, $60.
15:52They don't want to pay.
15:54We are tired and frustrated.
15:55We are nothing.
15:58Uber says individual driver behavior doesn't factor into fares and is instead based on marketplace conditions for the requested route.
16:05But on the company's Q4 2023 earnings call, Uber's CEO said.
16:10I think that what we can do better is actually targeting different trips to different drivers based on their preferences
16:18or based on behavioral patterns that they're showing us.
16:22That really is the focus going forward, offering the right trip at the right price to the right driver.
16:30When we asked Uber about this quote from its CEO, the company said matching drivers to specific trips is designed
16:38to reduce downtime for drivers while decreasing wait time for riders.
16:43Multiple studies and the drivers we talked to say the same thing.
16:47With a widening gap between rider prices and driver wages, Uber's take rate is increasing under its upfront pricing model.
16:57Take rate is the percentage the company keeps from all the rides it facilitates.
17:03Critics say that under the upfront pricing model, that share has been climbing.
17:07Len Sherman found a few things.
17:09Overall, he found that it's gotten harder for a lot of drivers to make money under upfront pricing.
17:15He also found that Uber increased its take rate.
17:19These days, you know, it goes high 20s, the 30s, even as high as 50% in some cases.
17:26During our ride along with Levi, he earned $27.31, which was 39% of the ride's initial cost without
17:34Margaret's tip.
17:35I would have at least generously thought you were getting like $50, maybe like $45 or something like that would
17:45be what I would be assuming.
17:47Meanwhile, Uber's share of a single ride, or the service fee, is $21.29.
17:53That's 30% of the ride.
17:55Levi showed us that Uber also took a cut from the wait time fee.
17:58For wait time, I paid $0.56.
18:01See, I got paid $0.37.
18:04How was that?
18:05I'm the one that did the waiting.
18:09It's like, why is Uber making money on the wait time?
18:14Levi's experience is just one data point, but it does echo findings from much larger studies.
18:20A 2025 study of 258 drivers found that upfront pricing enabled Uber to increase its median cut from 25%
18:28to 29%, and sometimes to over 50% in the UK.
18:32And in Lynn Sherman's latest analysis of roughly 50,000 trips by three veteran drivers, he found that his measure
18:40of Uber's average take rate exceeded 50% for each driver in 2026.
18:46Uber denies that its take rates have increased.
18:49The company blames those outside costs, especially the ever-increasing cost of insuring trips booked through Uber, as the main
18:56reason riders pay more than drivers receive.
18:59On Levi's end, he can see that on his receipt as part of commercial auto insurance, which ended up being
19:05$15.78, or a 22% cut of the ride.
19:10And at the top of Margaret's receipt, she even received a warning of just how much government-mandated insurance costs
19:16have gone up nowadays.
19:17But when Levi, who's a former accountant, took a closer look at the numbers, he was more confused by Uber's
19:24explanations.
19:25Levi tracked his numbers over a two-year period.
19:29I got the same ride from Ithaca, New York, to Syracuse Airport.
19:34And the commercial auto insurance fluctuated from $15 for that ride to $50 for that ride.
19:42And you'd think that the commercial auto insurance would be tied to, you know, cost per mile or something, you
19:54know what I mean?
19:55Something logical.
19:56But no, it was just, it was a random number.
19:59I like to think as an accountant I could understand it, but I don't.
20:02Lynn Sherman also crunched Levi's numbers and found that the massive fluctuations in Uber's insurance and operational fees were statistically
20:11unrelated to the time or day of the trip.
20:14I equate it to going to a casino.
20:19That's what being an Uber driver is like.
20:22And you could tell by my reaction.
20:24There are times I'm winning big.
20:26And then there are times you go into the casino and you can't win.
20:31You keep losing money.
20:33That's what being an Uber driver is like with upfront fares.
20:43Today, upfront pricing has become the standard across rideshare and delivery apps.
20:47By October 2022, Lyft expanded upfront pay for drivers across nearly 70 markets nationwide.
20:55Two years later, Lyft reported its first annual net profit nearly $23 million.
21:01Other companies like Instacart and DoorDash might not use the term upfront pricing.
21:07But when you look at payouts, for instance, for delivery drivers, they vary in a similar way.
21:14I think it's fair to say that Uber pioneered upfront pricing.
21:18There's no doubt about that.
21:20Not just for the whole gig economy, but really they pioneered a model that is being used and exported to
21:26other industries.
21:28For riders and drivers who navigate these algorithms every day, the shift has cost them something harder to measure.
21:36Trust.
21:37We just want to be respected and be treated fairly.
21:41Like I said, and they're not going to do it.
21:42We need help.
21:43I always figured if you work hard and you do the right thing, it will work out.
21:47But when you're up against such a big conglomerate that could care less what you do for them, it's tough.
21:55It is cold.
21:57It's indifferent.
21:58It feels manipulative by an algorithm, not like a company that wants to help you succeed.
22:08Dara, if you see this video.
22:11I like being an Uber driver.
22:14I really do.
22:16I like meeting the people.
22:17I like the flexibility.
22:18I think the biggest challenge that you have as a company is that nobody trusts you.
22:25Well, I have no problem with Uber making money at any point.
22:29I have a problem with Uber making money off of asymmetric information.
22:34I don't know what to do.
22:37I know it's a good one to do.
22:38I don't know what to do.
22:39I don't know what to do.
22:39I have, I don't know if it has been a monthly account, or if it can be one of them.
22:40I can do it!
22:40I mean, I'm sorry I'm maybe not even though if it is a affair.
22:41I'm not sure.
22:53I know how to get back in the house.
22:53It's pretty good.
22:55You can't get back in the house to get back in the house and reading the house.
22:56I think it's a good idea.
22:56You can do everything I'm not sure.
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