© 2023 JETIR May 2023, Volume 10, Issue 5 www.jetir.

org (ISSN-2349-
5162)

Dynamic Pricing for taxi fares based on demand,

weather and fuel price
Chandramouli P Gnnanavel S Dr. Venkatesan Selvam
IV Year IV Year Professor
Department of Computer Science and Department of Computer Science and Department of Computer Science and
Engineering Engineering Engineering
B.S.Abdur Rahman Institute of B.S.Abdur Rahman Institute of B.S.Abdur Rahman Institute of
Science and Technology Science and Technology Science and Technology
Chennai 600 048 Chennai 600 048 Chennai 600 048

Abstract - The transportation industry has been rapidly evolving over the
past few years, with ridesharing and taxi services becoming increasingly
popular. To stay competitive, it is important for taxi companies to adopt
innovative strategies to attract and retain customers. One approach is to
develop a dynamic pricing system that can adjust fares in real-time based
on various factors, such as demand, weather, and fuel prices. This project
aims to design an intelligent pricing system for taxi rides that can analyse
and interpret data related to demand, weather, and fuel prices, and use
this information to adjust fares dynamically. The proposed system will
incorporate data analytics to optimize pricing. In the proposed system,
historical data related to demand, weather, and fuel prices in different
areas are collected and analysed. The system will use insights derived
from the data analysis to create a formula to adjust fares dynamically in
real-time, ensuring that customers are charged a fair price for their ride
and drivers are fairly compensated for their services. The proposed system
will provide an easy-to-use interface for both customers and drivers,
allowing them to view the estimated fare for a particular ride before
booking.
Keywords - dynamic, Insights, weather, demand, fuel.
I. INTRODUCTION
In today's fast-paced world, people depend on taxis for
transportation needs more than ever before. However, the traditional
pricing model, where the fare is based solely on distance and time,
may not be the most efficient way to meet the needs of the riders
and the drivers. The aim of this project is to design a dynamic
pricing system for taxi rides that will intelligently change the pricing
based on demand, weather, and fuel prices. By using advanced
algorithms, this system will predict the demand and supply of taxis
in real-time and adjust the pricing accordingly. The system will take
into consideration various factors such as weather conditions, fuel
prices, and current demand to ensure that both passengers and
drivers are satisfied with the pricing. This project has the potential
to revolutionize the taxi industry by making taxi rides more
affordable and efficient for passengers, while also ensuring that
drivers receive fair compensation for their services. There is several
existing dynamic pricing software for taxi rides, such as Uber's
surge pricing and Lyft's prime time pricing. However, these pricing
models have faced criticism from customers for their high prices
during peak demand times. Additionally, some drivers have
expressed frustration with the lack of transparency in how surge
pricing is calculated and how much of the increased fare they
receive. Other dynamic pricing software used in the airline and hotel
industries may not be directly applicable to the taxi industry due to
differences in demand patterns and customer behaviour. In the
airline industry, dynamic pricing has been used for decades to adjust
ticket prices based on the demand for a particular flight. Airlines use
complex algorithms to predict demand and adjust ticket prices
accordingly. For example, if there is a high demand for a particular
flight, the airline will increase the price of the ticket to maximize
revenue. On the other hand, if there is low demand for a particular
flight, the airline will lower the ticket price to attract more
customers. In the hospitality industry, hotels use dynamic pricing to
adjust room rates based on demand and other factors such as
seasonality, events, and even weather conditions. For example, a
hotel in a tourist destination may increase room rates during peak
tourist season, or during major events such as festivals or concerts.
Similarly, if there is inclement weather, a hotel may lower room
rates to attract more guests. However, the application of dynamic
pricing in the taxi industry is still in its early stages. Unlike airlines
and hotels, taxis are a much more fragmented market with many
small and independent operators. Moreover, there are various
factors that need to be taken into consideration for dynamic pricing
in the taxi industry, such as traffic conditions, fuel prices, and the
availability of drivers. One major challenge in implementing
dynamic pricing for taxis is the lack of data. Airlines and hotels have

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access to a vast amount of data such as booking trends, customer
preferences, and historical pricing data. In contrast, the taxi industry
has limited data on demand patterns, driver availability, and traffic
conditions. To overcome this challenge, taxi companies are
increasingly relying on technology to collect and analyze data from
various sources such as Global Positioning System (GPS), weather
forecasts, and social media. Another challenge is the potential for
backlash from customers. While dynamic pricing can help taxi
companies maximize revenue, it can also lead to price
discrimination and create a perception of unfairness among
customers. For example, a customer may be charged a higher price
for a ride during peak hours, while another customer traveling at the
same time may be charged a lower price due to different demand
patterns in their respective areas.
II. RELATED WORKS
There are a few existing systems that aim to provide dynamic pricing
for the taxi industry. One such system is Uber's surge pricing
algorithm, which increases the fare during peak hours or when
demand is high. Another example is Lyft's Personal Power Zones,
which offer drivers higher pay rates for driving in areas with high
demand. Other systems include Curb, which uses real-time data to
optimize pricing and match supply with demand, and Arro, which
offers dynamic pricing and a fixed fare option. Some taxi companies
have also developed their own dynamic pricing systems, such as
Flywheel's taximeter-based system that adjusts the fare based on
demand and traffic.
While these systems have been successful in their respective
markets, they are not without their limitations. Surge pricing has
received criticism from consumers who feel they are being unfairly
charged, while drivers have expressed frustration with unpredictable
earnings. Additionally, some of these systems are proprietary and
only available to drivers who work for specific companies, limiting
their impact on the industry. As such, there is a need for an open and
adaptable system that can be used by any taxi company or
independent driver. A system that considers various factors such as
weather, traffic, and fuel prices, and provides an optimal pricing
strategy and transparency that benefits both drivers and passengers.
III. METHODOLOGY
1. DATA DESCRIPTION FOR TAXI DATA
The New York Taxi dataset is divided into separate files for each
month from January 2009 to June 2022. Each file contains
approximately 10 million rows and 20 columns of data. The
columns names include VendorID, tpep_pickup_datetime,
tpep_dropoff_datetime, passenger_count, trip_distance,
RatecodeID, store_and_fwd_flag, PULocationID,
DOLocationID, payment_type, fare_amount, extra, mta_tax,
tip_amount, tolls_amount, improvement_surcharge,
total_amount.
2. DATA DESCRIPTION FOR WEATHER DATA
The New York weather dataset provides hourly weather
observations collected by the National Oceanic and Atmospheric
Administration (NOAA) for Central Park in New York City. The
dataset contains weather data from January 1st, 2010, to December
31st, 2022. The columns names include date, temp_avg,
temp_max, temp_min, dew_point_avg, dew_point_max,
dew_point_min, humidity_avg, humidity_max, humidity_min,
wind_speed_avg, wind_speed_max, wind_speed_min,
JETIR2305738 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org
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wind_gust, pressure_avg, pressure_max, pressure_min,
precipitation, snow_depth.
3. DATA CLEANING
To ensure the accuracy of the analysis, it is important to clean the
data. The cleaning process may involve the removal of missing
values, outliers, and other anomalies that can affect the analysis. The
data can also be pre-processed to extract useful features that can be
used for analysis. For example, the data can be converted to hourly
or daily aggregates to capture the demand pattern. Furthermore, it is
important to ensure that the data is consistent across different
sources, such as the pickup and drop off location and time, to
prevent errors in the analysis. The cleaning process can be
performed using programming languages such as Python.
4. DATA TRANSFORMATION
Data transformation is an important process in data analysis where
raw data is transformed into a more structured format that can be
easily analyzed. This process involves the conversion of data from
one format or structure to another, which may include filtering,
sorting, grouping, aggregating, or merging data sets. Data
transformation is important because it helps to standardize data,
making it easier to analyze and understand. In the case of the New
York taxi dataset, data transformation is necessary to make sense of
the large amount of data that is generated by the taxi system. This
involves cleaning, filtering, and organizing the data to extract
meaningful information about taxi rides, such as pickup and dropoff
locations, trip duration, and fare amounts. Data transformation is an
iterative process that involves testing different transformation
methods until the desired results are achieved.
5. FEATURE ENGINEERING
Feature engineering is the process of creating new features from the
existing data that can improve the performance of the forecasting
model. In this project, relevant features, such as seasonality, trend,
and lagged values, were extracted from the dataset to capture the
underlying patterns and trends in the data.
6. DATA VISUALISATION
Data visualization is an important step in the data analysis process
as it helps to communicate insights in a more intuitive and
understandable way. In the context of this project, data visualization
is particularly useful for gaining insights into the patterns and trends
in the New York taxi dataset and the New York weather data.
Through visualizations, we can identify peak hours, popular pickup
and drop-off locations, and other important features that could
impact the demand for taxi services. Correlation between weather
data and taxi data can be found through data visualization. By
plotting the taxi data with the corresponding weather data, patterns
and trends can be observed. For example, a scatter plot of the
number of taxi pickups vs. temperature can show whether there is a
relationship between the two variables. If there is a positive
correlation between the two, the points on the scatter plot will trend
upwards, indicating that as temperature increases, so does the
number of taxi pickups. Similarly, a scatter plot of taxi pickups vs.
precipitation can show whether there is a relationship between the
two variables. If there is a negative correlation between the two, the
points on the scatter plot will trend downwards, indicating that as
precipitation increases, the number of taxi pickups decreases.
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Figure 1 : Pick up hour vs number of pick ups
Figure 2: correlation between no. of trips, avg. fair and avg. distance
In the weekdays the demand peak between 7:00 to 10:00 and again
in between 16:00 to 19:00 (figure 1). But at the weekends, especially
during Friday and Saturday nights the demand increases. This is
because the New Yorker like to go on an outing which is a common
culture among working class people around the world.
A strong correlation is noted between average fair and distance
(figure 2), while a weak negative correlation is seen between fair
and number of trips. Thus, stating that distance has a huge effect on
price.
7. ALGORITHM
Predicted Price = BaseFare + (( TravelTimeInformation *
Per_Min_Charge * Per_KM_Charge * Weather_Charge_Rate
* Traffic_Charge_Rate * FuelPrice_Per_KM *
Surge_Charge_Rate * Item_Mutipiler) / USD_TO_INR )
The base fare is a fixed minimum charge that is applied to all types
of rides. The traveltimeinformation API provides the distance and
time taken to travel from the origin to destination entered by the
user, and this value is multiplied to determine the distance and time
taken charge.
The per_min_charge and per_km_charge are constant values that
determine the charge per minute and per kilometer traveled
respectively. These values are used in conjunction with the distance
and time taken to calculate the fare for the trip. Additionally,
weather_charge_rate and traffic_charge_rate are API data that
provide a rate for weather conditions and traffic conditions
JETIR2305738 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org
www.jetir.org (ISSN-2349-5162)
respectively. If the weather is rainy or traffic is high, the charge rate
increases. Otherwise, the rate remains constant at 1.
The fuelprice_per_km is a constant value that represents the cost of
fuel per kilometer traveled, and this value is factored into the
calculation of the fare. Surge_charge_rate is a dynamic fare
multiplier that is calculated in real-time using data from the Google
Maps platform. This value is used to adjust the fare based on the
current demand for rides.
The item multiplier is a multiplier that is applied to the fare based
on the type of taxi that is selected for the ride. Each type of taxi may
have a different multiplier that affects the price of the trip. Finally,
usd_to_inr is a currency converter that is used to convert the fare
from US dollars to Indian rupees. This conversion is necessary
because the formula for calculating the fare is derived from New
York taxi data and is based on US dollars.
To Summarize, the fare calculation system considers a variety of
factors, including distance, time, weather, traffic, fuel prices, surge
pricing, and taxi type. These factors work together to provide a fair
and accurate fare estimate for passengers, while ensuring that taxi
companies and drivers are appropriately compensated for their
services.
8. ARCHITECTURE
The user enters the pick-up and drop off location which is assisted
by the places API as it suggests or auto completes the location. Next
using the pickup and drop off locations the direction API finds the
direction between the 2 locations. The distance matrix API uses this
information to find the distance between the 2 locations and estimate
the duration. With this information the initial cost is identified.
Additionally, the location and time information are sent to traffic
API and weather API which is going to check the weather and the
traffic in the surroundings. If the weather condition is bad or there
is a huge traffic near the area, then the pricing will be increased
accordingly. The Distance Matrix API is a service that provides
travel distance and time for a matrix of origins and destinations. This
API is used to calculate travel times between different locations and
optimize routes for your taxi service. The Directions API is a service
that calculates directions between locations using an HTTP request.
This API is used to get directions between two points and optimize
routes for your taxi service. The Places API is a service that returns
information about places using HTTP requests. This API is used to
find places such as restaurants and hotels near a specific location.
Traffic API: The Traffic API provides real-time traffic data for
different locations. This API is used to get information about traffic
conditions in real-time and optimize routes for your taxi service.
Weather API: The Weather API provides weather forecasts for
different locations. This API is used to get information about
weather conditions in real-time and optimize routes for your taxi
service.
Figure 3: architecture diagram
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9. IMPLEMENTATION
The first step is for the user to enter the pickup and drop off location,
which is assisted by the Places API. The Places API is a web service
that provides information about places using HTTP requests. It can
be used to search for places, get detailed information about a place,
or even autocomplete a user's search query. This is particularly
useful when dealing with user input, as it reduces the likelihood of
errors or typos.
Once the pickup and drop off locations are identified, the Direction
API is used to find the direction between the two locations. The
Direction API is a service that calculates directions between
locations using an HTTP request. It can be used to determine the
shortest route between two locations or to get turn-by-turn
directions. This API helps to identify the most efficient and quickest
route between the two points, which in turn helps to calculate the
distance and duration of the trip.
The Distance Matrix API is then used to find the distance between
the two locations and estimate the duration. This API calculates
travel distance and time for a matrix of origins and destinations
using an HTTP request. It provides information about the shortest
route, distance, and travel time between multiple origins and
destinations. This information is used to estimate the initial cost of
the trip.
Additionally, the location and time information are sent to the
Traffic API and Weather API to check the weather and traffic in the
surroundings. The Traffic API provides real-time traffic
information, such as accidents and construction, along with traffic
flow and speed data. This data helps to estimate the traffic condition
around the pickup and drop off location, which can affect the
duration and cost of the ride. Similarly, the Weather API provides
real-time weather information, such as temperature, precipitation,
and wind speed, which can affect the safety and comfort of the ride.
If the weather conditions are bad or there is a high traffic near the
area, then the pricing will be increased accordingly.
IV. CONCLUSION
Considering the overall aim of the project to implement dynamic
pricing for taxi services, the proposed system has shown to be
successful in detecting changes in weather and traffic conditions and
adjusting the pricing accordingly. The system uses APIs like the
Distance Matrix API, Places API, Weather API, and Traffic API to
gather real-time data and make accurate pricing predictions. In
conclusion, the proposed system has demonstrated the potential for
implementing dynamic pricing in the taxi industry, which can help
increase the efficiency and profitability of the business while also
providing customers with a fair and transparent pricing model. By
leveraging the power of machine learning and real-time data
analysis, the proposed system has the potential to revolutionize the
way taxi services are priced and improve the overall user
experience.
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