Surge pricing motivates the private hire drivers

What is Surge Pricing

It was recently been reported price increases on the ride-hailing service have been dubbed “insane” by some users in recent weeks, particularly during peak hours with some of the fares doubled.

With the COVID 19 Restrictions in place, there were many instances of drivers dropping out of the private hire/taxi trade due to the reduced demand. With the relaxation of COVID restrictions in Singapore, there has been an increase in demand for transportation. However, the number of drivers on the road has not picked up despite many initiatives in place to help with this problem. This includes a referral network for experienced drivers and a “co-pilot” in which a veteran driver pairs up with a newbie.

In order to make sure that customers can receive a ride when they need it and drivers are adequately rewarded for their time and work grab uses dynamic pricing model.

Basically its a demand and supply model and hence surge pricing. When there are more individuals booking rides than there are drivers available in an area, rates will rise or go up in order for more drivers to travel to where customers are.

It was reported Grab do try to Keep the surge pricing at a reasonable rate. however its hard to determine what is really a reasonable rate.

What really motivates the Private Hire Drivers

Ultimately Drivers are human with bills to pay and family to feed. In order for them to be encouraged to provide a service, it all boils down to dollar and cents. If a ride has high earning potential then of course, the grab driver will be keen to take it up. In turn with the lure of high earning potential more drivers will be out driving especially at peak hour.

It might not be ideal for the passenger as they have to pay more for a ride. however, if a rider is in need of a ride and willing to pay the higher fee to attract a driver to pick up, then we thinks its a Win Win situation for both.

In addition, with the increased in fuel due to the Ukraine conflict, prices has to go up and be covered by commuters. Commuters cannot expect prices to be like in the past with the situation on hand.