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Prices hike up on New Year’s Eve

Posted at 6:12 PM, Dec 31, 2013
and last updated 2013-12-31 19:23:47-05

(CNN) — To the traditional ticker of crazy New Year’s Eve price hikes that include $30 for a glass of Korbel and $375 for dinner at Applebee’s, you can now add one more bloated expense: a ride from the popular car service Uber.

The booming Web-based service for folks willing to pay a premium for suited drivers and black SUVs says its New Year’s Eve customers should expect especially pricey rides. Uber’s rates are tied to supply and demand, and the company says there is no greater demand than on New Year’s Eve, when the number of customers typically far exceeds the number of drivers.

But CEO Travis Kalanick has some (sort of) useful advice: If you want to dodge the hefty charge, just stay out later. Like, until 3 a.m. later. Kalanick says New Year’s Eve demand peaks from 12:15 a.m. until 3 a.m. So if you’re ready to dial-up Uber at 1 a.m., just linger at that party for another two hours to get a cheaper ride. Even if all the other guests have left. And it’s just you and the host and lots of small talk. It won’t be awkward at all.

Uber uses an algorithm that adjusts pricing based on demand, so rate hikes during peak hours are pretty much how the car service rolls. They even have a name for it: “surge pricing,” which may sound an awful lot like “price gouging” to many people, but Kalanick has long defended the institutionalized policy as simple free market capitalism — Econ 101, baby.

He also says that “surge pricing” benefits the company’s drivers by incentivizing them to get behind the wheel with the lure of larger paydays. Uber drivers are paid a percentage of the overall fare. Lucky, then, for the driver who ventured out during a New York City snowstorm a few weeks ago and got a cut of the $415 that Jerry Seinfeld’s wife paid to take her children to a pair of social events.

In a blog post, Uber offered an “ultra pro-tip” in addition to Kalanick’s advice, advising that the sweet spot for a lift is between 10:30 p.m. and 12:15 a.m. when “open Ubers are everywhere right before the ball drops.”

Which is nice, because after dropping $375 on riblets and fiesta lime chicken, you’ll probably be ready for something affordable.

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