Winter is here, and Uber is preparing for a seasonal drop in demand. The transportation network company has announced that it’s cutting prices in more than 100 cities across the United States and Canada.
Uber said in a statement, “Seasonality affects every business, and Uber is no exception because when people hunker down at home, demand for rides drops. Fewer trips are tough on drivers, many of whom want to save money and pay off their holiday credit card bills now that January is here.”
The drop in prices depends on the city, and specific demand numbers in that city. Uber has explained that pricing decisions are made based on many variables, including different economic circumstances, different regulations, and different competition.
Uber also stated that their strategies did not always work, "Last year, for example, earnings fell in some cities and we changed back…In Charlotte, for example, we pulled a 40 percent price cut back to 29 percent, and earnings for drivers grew by nearly 20 percent in 2015. And in two cities, including Seattle, we ended up reversing the price cuts entirely when it became obvious that prices were already low enough."
Uber’s success is undeniable, and the company continues to raise money. Currently Uber is seeking new capital from of high-net worth investors in the Morgan Stanley's network. The minimum investment required is $250,000, and this raising money round is bringing the estimated valuation of Uber, which is a private company, to an astonishing $62.5 billion.