How Much Should Uber Charge for a Driverless Ride?

I just read an interesting article about Waymo and their driverless vehicles.  It got me thinking about pricing (though pretty much everything gets me thinking about pricing).

Most of us are familiar with Uber.  Imagine that Uber buys a fleet of driverless vehicles.  Now, when you open the Uber app to request a ride, in addition to Uber X, Uber Black and Uber Pool, it also says Uber Empty (the name I just made up).  Would you pay more for Uber Empty?  Would you need a discount to incentivize you to ride Uber Empty?  How should Uber price this?

Your initial reaction was probably that it should be less expensive, right?  After all, they don't have to pay a driver.  From discussions with lots of Uber drivers, it appears that a full-time driver makes between $50-$75k per year.  All those savings should go to the riders, shouldn't they?

Not so fast, my friend.  That argument assumes price is based on costs.  Would you pay more for a ride if:

  1. You didn't have to talk to the driver?
  2. You were less likely to get into an accident?
  3. You could tell your friends you rode in an autonomous vehicle? (Novelty won't last long.)

Your answer may be yes, Uber should charge you more.

But some people don't value those things.  They like talking to the drivers.  They trust humans more than machines.  They think if Uber saves money, so should they.  Uber should charge people less.

If I were Uber, here's what I'd do:
Launch Uber Empty at a price premium.  Some people will use it.  Keep track of those people.  These are the people who value the 3 attributes listed above.  Hold the price for Uber Empty for those riders into the future.

For those riders who don't use Uber Empty, slowly lower their price until they decide the price difference is worth it, or until Uber hits their lower price threshold.  Once you learn their relative value, use that as the number to charge them in the future.

Now project yourself into the future.  Uber Empty is no longer new.  When someone opens a new Uber account, start the Uber Empty price for that person higher than Uber X.  Then, if they don't buy, slowly bring the price down until they do.

Just a fun little thought experiment.  What do you think?  Leave your comments in the space below.

Mark Stiving

Mark Stiving

Mark Stiving is an instructor at Pragmatic Marketing with more than 20 years of experience in business startup, development, management, turnaround and sales and design engineering. He has helped companies create and implement new pricing strategies to capture more from the value they create, and has consulted with Cisco, Procter & Gamble, Grimes Aerospace, Rogers Corporation and many small businesses and entrepreneurial ventures. He has led pricing initiatives as director of pricing at Maxim Integrated and as a member of technical staff at National Semiconductor. Mark also has served as president of both Home Director Inc. and Destiny Networks Inc. and as an assistant professor of marketing at The Ohio State University. Mark also is the author of “Impact Pricing: Your Blueprint to Driving Profits” (Entrepreneur Press, 2011). He can be reached at mstiving@pragmaticmarketing.com.


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