Smart pricing key to success

KOLKATA: If easy-to-book, clean and air-conditioned cabs have caught the fancy of commuters, an attractive pay package for operators has ensured that there is no yawning gap between the demand and the supply. But at certain hours of the day, the gap becomes hard to bridge. Consequently, certain aggregators have adopted a surge-pricing policy depending on the demand to tide over the crisis.
According to the policy, fare rises almost four-fold during rush hours. A ride that costs Rs 7.5 per km during non-peak hours rises to Rs 40 per km during peak hours, said Amitabha Basu, a transport economist who closely watches app-cab services. It ensures availability of the service and leaves drivers pleased at the prospect of making some extra bucks.
The fare largely depends on the time of the day a rider books the cab. During week days, demand remains low between midnight and 7am. Demand surges from 7am to 11am and its non-peak hours from 11am to 5pm. Demand remains highest during the evening office hours — it is the super peak hours.
“Super-peak hours are mostly home-bound trips and the demand is really high. On Saturday and Sunday, however, peak and non-peak hours changed drastically. On these two days, demand is high between 10am and 5pm. It’s super peak hours between 5pm to midnight,” said Rajesh Bhagat, an operator.
“If Uber is surging in a nearby location, we get a text message from the company and it gives us the chance to earn more money,” an Uber cabby told. Basic principle economics — demand and supply —has left drivers happy and consumers with mixed feelings. Taxi firms, notably TaxiForSure, do not follow any surge pricing mechanism.
Ola follows a slightly different kind of model for peak-hour traffic. Booking during peak hours is charged a flat Rs 50 over and above actual fares. A fixed incentive to the driver motivates him to get on to the platform when customers need him most, said Olacabs official.
On an average, the monthly income remains Rs 60,000–70,000. For Rs 80,000 a month, a driver needs to push himself very hard. “If you have a driver, your earning will not be much after paying Rs 20,000 as driver’s salary, Rs 20,000 as fuel and maintenance and Rs 5,000–10,000 as EMI. If you drive your own cab, then the earning is average,” said Rajesh Bhagat, an app-cab operator.
“A yellow taxi, on the other hand, fetches its driver between Rs 300 and Rs 350 a day. That's around Rs 2,000-2500 a week. But the new companies are offering far higher returns,” said Bimal Guha of the Bengal Taxi Association (BTA). But this is due to non-administered pricing they enjoy, added Guha. He alleged that administered pricing imposed on them has deprived them of a level-playing field with app cabs.