Imagine two taxi drivers working at the same time, in the same city, for the same platform. One earns €18 an hour, the other €12. Nobody knows exactly why. This is the world of dynamic pricing — a controversial innovation in the gig economy. As consumers, we have already grown accustomed to it when booking hotels, ordering food delivery, or buying train and plane tickets. But what are the real pros and cons?
Uber introduced dynamic pricing in the United Kingdom in 2023. Since then, an algorithm determines not only what passengers pay, but also what drivers earn. Rates vary by trip, by moment, by location. The fixed 25% commission Uber previously charged no longer exists. Instead, Uber’s share shifts from ride to ride — and, as Oxford research shows, trends steadily upward on average.
The case for dynamic pricing
Supporters point to the economic logic underpinning the system. When demand for rides peaks — after a concert, during a downpour, around closing time — higher fares draw more drivers onto the streets. Supply responds to demand. For passengers, this means a car is actually available when they need one. Without a price incentive, drivers would have little reason to move toward busy areas, and waiting times would rise.
For drivers, the system theoretically offers the opportunity to capitalize on peak rates. Those who plan smartly, know where the crowds are, and position themselves at the right place at the right time can earn more than under a fixed-rate system. Uber also emphasizes that drivers always see the destination and the fare before deciding whether to accept a ride. That freedom of choice, the company argues, represents a form of autonomy.
The case against
The reality, according to research, looks considerably less promising. The Oxford study — based on 1.5 million trips by 258 drivers — shows that average hourly pay fell after dynamic pricing was introduced, while Uber’s share per trip increased. Uber’s surplus per driver hour rose by 38%. The gains from the system flow not to drivers, but to the platform.
Beyond pay, the unpredictability itself is a serious problem. Before dynamic pricing, drivers could draw on years of experience to make reasonable estimates of what a given ride would pay. After its introduction, that predictive ability collapsed almost entirely. Market knowledge built up over the years became largely worthless overnight. Drivers describe their situation not as working, but as gambling.
There is also a fundamental power imbalance embedded in the system. Passengers cannot see what drivers earn. Drivers cannot see what passengers pay. Uber sees everything. This information asymmetry — described by researchers as the “algorithmic gamblification of work” — allows the platform to optimize the distribution in its own favor, with no meaningful ability for either party to scrutinize or contest the outcome.
Research from Delft University of Technology adds a troubling further dimension: even minimum wage regulation offers no adequate protection. Platforms can respond with what researchers call a lockout strategy, simply restricting access to the app for a portion of their driver pool. Active drivers may earn somewhat more, but two-thirds of their colleagues effectively lose their livelihoods. The race to the bottom changes shape, but does not disappear.
The balance
Dynamic pricing is not inherently wrong. As a mechanism for matching supply and demand, it offers genuine benefits — for passengers who can get a ride, and for drivers who can capitalize on peak moments. But the system, as Uber has designed it, combines maximum revenue optimization for the platform with minimum transparency for everyone who depends on it.
The core problem is not the algorithm itself but who controls it, who sees the outcomes, and who bears the risks. As long as the answer remains the same — the platform controls, no one else sees, the driver bears — it is difficult to argue this system is fair.
And as long as consumers continue to choose convenience over conditions, the race to the bottom will continue. Uber’s true power lies not in its algorithm, but in demand creation: a generation that treats on-demand living as the default. Until that changes, Uber has little reason to change the system.
Walther Ploos van Amstel