Get Sorted: Avoiding ride-sharing holiday price surges

New rideshare apps bring new costs. Photo / 123RF

This time of year there are too many hidden costs that pop up: extra entertaining, extra drinks, new party outfits, public holiday pricing, extra taxis… the list can go on and on.

Some of these take us by surprise because we haven't made them part of our plans for our money, but others are downright new and unforeseen. New tech, with its new business models, brings new costs to wrangle.

Picture this: It's 11pm after a concert, and 47,000 people are scrambling to head home all at once. Everyone's calling for an Uber or Zoomy, and there's nowhere near enough cars to go around.

When one rideshare does show up, many try to make a quick deal with the driver. "Can you take me home for $50? I'll just give you cash."

But it doesn't work like that. Because of the way these rideshare services can charge surge prices – multipliers applied to a typical price at peak times – you can hop in and that trip can easily end up costing $150.

It can't be worth that, surely.

"Kiwis will pay that," explained my rideshare-driving friend the other night. An event was on, and he popped open his Uber app to have a look at how much money there was to be made. Turned out with just a couple of rides he could make as much as he typically did in a day.

Surge pricing was rising steadily, peaking as high as 5.2 times what the normal fare would be. A ride that would normally cost $25 was costing someone more than $125 instead.

And while this was great news for drivers, many riders were undoubtedly getting caught out. Who plans ahead to spend $125 on a ride that would typically cost $25?

Price gouging?

Surge pricing is hugely controversial. From a rider's point of view, it smacks of price gouging – where companies take advantage of demand spikes and hike prices astronomically. They've found the golden goose, as it were, and we're left gobsmacked.

After all, a ride is a ride is a ride – the distance won't change, the service stays the same. Should it be worth five times more?

But this rideshare "market" is also meant to increase the supply of drivers, as more will turn up if there's big money to be made. "We don't usually make much," one driver explained to me, "so it's a good thing."

Anyone looking for a side hustle? Fire up a ride-sharing app next time something's on and get out there.

Surge protection

A rideshare app makes it simple to hop in and head home, and the payment is taken care of through a linked credit card. The cost is mostly hidden until after you arrive, and the receipt is buried somewhere in your email inbox.

All of which is great for convenience, but not for conscious spending. Especially when it's late and you just want to get on your way as soon as possible.

What to do? Now that we know this can happen, we can either plan ahead to absorb the costs (without racking up debt) or set up an alternative: use public transport, or find a friend or parent to swing by and pick us up.

As always, new costs for new services are fine as long as we don't get caught out, and as long as they fit our plan for our money. Feels like everyone else has a plan for it too – usually for us to give it to them!

So next time you're planning to Zoomy or Uber home at peak time, be ready to surf the surge: the cost may be higher than you thought.

Roll on, silly season.

- Get Sorted is written by Sorted's resident blogger, Tom Hartmann (@TomHartmannNZ). Check out the guides and tools from Sorted – brought to you by the Commission for Financial Capability – at sorted.org.nz.