Ride-hailing company Lyft is trying to kill off surge pricing, or ‘primetime’ as the company calls it, while also generally reducing fares to get more riders.
As reported by TechCrunch, Lyft has had some success in cutting fares to increase ridership, though it’s come with a cost. In the company’s Q2 2023 earnings report, it noted an increase in riders but a decrease in revenue per rider of about five percent quarter-over-quarter. Lyft’s number of active riders increased from 19,552 to 21,487 in Q2.
Reducing fares to encourage more ridership is only one part of the company’s ongoing efforts to improve pricing, however. During an earnings call, Lyft CEO David Risher called surge pricing a “bad form of price raising… because riders hate it with a fiery passion.”
Surge pricing or primetime pricing happens during peak demand for ride-hailing apps. It sees the cost of a ride increase accordingly. However, ride-hailing apps have come under scrutiny for absurd surge pricing. For example, during a 2022 snowstorm, Torontonians reported huge increases in Uber ride fares due to surge pricing. And a couple of years ago, rumours went around that Uber jacks fares when it detects your phone battery is low, though it’s unlikely that the company actually does so.
Typically, surge pricing aims to encourage a higher supply of drivers at peak times by allowing them to earn more.
Risher said that Lyft has been trying to kill its version of surge pricing, and it’s been able to reduce is thanks to a high driver supply. Lyft’s driver supply is the highest in three years and it’s up over 20 percent year-over-year. Overall, Lyft says surge pricing has impacted 35 percent fewer rides than in Q1.
Source: Lyft Via: TechCrunch
MobileSyrup may earn a commission from purchases made via our links, which helps fund the journalism we provide free on our website. These links do not influence our editorial content. Support us here.
