The battle of the private car hires
Perhaps you’ve seen our last post on Uber vs GrabCar vs Taxis. But the price war took an interesting turn at the end of August when Uber announced that they would be moving to an upfront pricing model, similar to what Grab has always been doing.
In response, Grab shaved 15% off their fares (both the base fare and the per km fare).
After all these strategies, you would expect Grab and Uber fares to get significantly lower – but in reality, did they really?
Well, on paper, it is.
The 15% reduction in fares means that GrabCar now operates with a base fare of $2.55 and a per kilometre rate of $0.68.
Compared to UberX’s new upfront prices, which don’t seem to have any mathematical basis (pricing-wise, Uber insists that nothing has changed, and that their upfront prices are based on existing data from commuters. Their claim is that prices are still dependent on the usual factors, like distance and time and the demand and supply that used to affect surge), GrabCar appears to have the upper hand.
However, since Grab’s demand surcharge is based on the demand-supply ratio in the area, the lower fares actually mean there’s a higher demand for GrabCars, thus driving the price back up. In cases like these, there is a possibility that UberX might actually be cheaper.
Let’s just look at several real-life scenarios collected over the past week.
Scenario 1: From Bedok to Fusionopolis at 9am (weekday morning peak hours)
If you’re hoping to get an UberX or GrabCar in the morning to head across the island to your office, you’d be better off paying a doctor for an MC instead.
Still, Uber is the cheaper option (but you’re probably better off taking a taxi if there’s an insane price surge). This could be due to several factors, including the demand-supply ratio in the area.
Scenario 2: From Clarke Quay to Sengkang East at 2.15pm
An uncommon journey to be sure, but I wanted to see how the apps would fare in the middle of the afternoon.
In this scenario, the prices were similar but there was a notable difference: mathematically, Grab should have quoted a fare of $14 instead of $18 if dynamic pricing did not kick in, whereas Uber quoted $18.30 without dynamic pricing.
Scenario 3: From One Raffles Place to Bishan at 4pm
What is surprising is how wide the disparity is in this case, though! Despite higher fares for both apps, riding with UberX would save you more than $4.
Just for curiosity’s sake, outside of peak hours, such a journey should cost only $11 via Grab! Mathematically speaking, of course. I highly doubt UberX could compete with that price.
Scenario 4: From Fusionopolis to Bedok at 7.25pm (weekday evening peak hours)
Heading home after work surprisingly gave me no peak hour higher fares.
Despite it being the same distance as Scenario 1, the fare for UberX was higher than GrabCar this time around.
What does this mean for us riders?
Clearly, there’s been a change in UberX’s pricing scheme. Since the introduction of upfront pricing, there is no longer a discernible mathematical way to guess how much an UberX ride will cost.
In fact, just refreshing the Uber app a couple of times in the same few minutes gave me slightly different fares (about 10 cents) for the same journey.
This means that, for UberX, the demand-supply ratio in the area is much more dynamic than before. It also means that while UberX will tell you when there are significantly higher fares, it will not inform you for higher fares that are less significant.
So that means we should ride with GrabCar right?
As the scenarios have shown, that’s not true either. GrabCar is not always the cheaper option, and when it is, it’s sometimes just barely so.
What the change in UberX’s pricing model essentially means is that riders now have to check both apps (multiple times) before determining what their cheapest fare is.
By Peter Lin, MoneySmart, 23 September 2016
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