Surge Pricing Algorithm & Spatial Indexing Architecture
Surge Pricing Algorithm & Spatial Indexing Architecture Why is it that every time it rains, ride-hailing fares double, or even triple? It’s not a human operator manually adjusting the prices behind a desk. Rather, it’s the result of an incredibly sophisticated Stream Processing engine running in the background executing the surge pricing algorithm. This analysis breaks down the architecture of a real-time dynamic pricing system: indexing geographical rider demand and driver supply using Uber’s H3 hexagonal spatial grids, aggregating supply/demand ratios over Redis sliding windows, and calculating dynamic fare multipliers while damping oscillations and preventing boundary gaming. We also cover why Scaling your Database to handle Surge traffic is a strict prerequisite to prevent your system from crashing during massive traffic spikes. ...