Surge pricing has always been a major point of contention for rideshare customers, and the recent news from Lyft is likely to be well-received. The company, known for its “prime-time” pricing during high-demand periods, is reportedly working on phasing out this practice.
In an earnings call this week, Lyft CEO David Risher acknowledged the complex dynamics of surge pricing. While it does incentivize more drivers to hit the road when demand spikes, it also deters passengers who either can’t afford or simply don’t want to pay the elevated fares. Risher remarked that prime-time pricing is particularly unpopular among riders, describing it as a “bad form of price raising” that customers strongly dislike. He mentioned that as Lyft’s driver supply has improved, the company has been able to significantly reduce the prevalence of surge pricing.
Post-pandemic, Lyft has seen a notable increase in the number of available drivers. This bolstered driver base allows Lyft to better manage peak times without needing to rely as heavily on surge pricing in certain areas. Additionally, drivers are working more hours on average than ever before, which has contributed to a 35% decrease in the number of rides affected by surge pricing in the last three months compared to the previous quarter.
While this shift has resulted in a decline in revenue for Lyft, Risher emphasized the benefits for both riders and the company’s overall market performance. He suggested that although surge pricing might not be eliminated entirely, it will be used much less frequently moving forward.
This strategic move may give Lyft an edge over its main competitor, Uber, which still employs surge pricing. Reducing or eliminating surge pricing could help Lyft attract riders from Uber and strengthen the loyalty of its current customers.
If you’re exploring other ridesharing options beyond Lyft and Uber, there are numerous alternatives worth considering.