Strategy question
Uber Eats added a surcharge of $4 for all food delivery orders under $20. Why did uber eats add this surcharge? How is it going to change user behavior?
- CarGurus
- Strategy
- Medium
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What this question tests
Understanding of unit economics and behavioral response to pricing changes in a delivery marketplace.
How to approach it
- State the likely business reason: small orders are unprofitable once delivery cost, driver pay, and restaurant commission are netted out.
- Explain the mechanism: the surcharge shifts marginal cost of small orders back to the customer instead of subsidizing it fully.
- Predict behavior change: some users will increase basket size to avoid the fee, others may reduce order frequency or switch platforms.
- Consider the segment effect: price sensitive occasional users are more likely to churn than habitual daily users.
- Propose monitoring: track average order value, order frequency, and churn rate split by order size cohort after the change.
- Recommend a mitigation, such as waiving the fee for loyalty program members, to protect the most valuable customers.
What a strong answer includes
- Grounds the reasoning in unit economics, small order unprofitability, rather than a vague 'to make more money' answer.
- Predicts a specific, testable behavior shift, basket size increase versus order frequency drop, not just 'users will be upset'.
- Gives an illustrative number, e.g. assumes a 10 percent reduction in sub $20 orders alongside a 5 percent AOV increase.
- Proposes a concrete mitigation, loyalty exemption, balancing revenue protection with retention of valuable users.
Common mistakes
- Giving a one line answer like 'to make more money' with no unit economics reasoning behind it.
- Not predicting any specific behavior change or segment impact from the surcharge.
- No monitoring plan to check whether the change backfires on retention.
Likely follow-up questions
- How would you measure if this hurt retention?
- Who bears the fee, and is that fair to price sensitive users?
- What would you do if AOV rose but overall order volume dropped?
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Learn the skill behind it
Chapters of the AI PM course that teach what this question tests.
- Chapter 4: Discovery and strategy for AI products
- Chapter 9: Prove it paid off: outcomes, economics, and pricing
- Chapter 14: Get the job: the AI PM interview loop