RSF Guide: Comparing Uber and Lyft in 2018
Every year, in fact, every day, drivers and passengers compare the services offered by Uber and Lyft, mainly because these are the two giants of rideshare in the US. There are other options available, and they include minor rideshare companies that operate in local spheres, public transport systems, private transportation, and taxis.
This article will look at the difference between the two rides share giants in the US, Uber, and Lyft, comparing seven factors and providing a personal insight into which company is stronger in each factor.
The seven categories:
Overview
Before I start to delve into the seven factors, I will first look at the two companies from a holistic viewpoint, and then I will go into details.
Uber:
Founded in 2009 in California.
Subsidiaries: UberEats, Otto, Rasier/Raiser LLC, deCarta, Geometric Intelligence Inc., Xchange Leasing, LLC., Uber International C.V., Rasier-CA llc., Uber India Technology., UberEATS India., Uber India Systems Pvt Ltd., Complex Polygon, Inc.
Size: 633 Cities worldwide, employs over 12,000 employees
Value: estimated at around $68 billion, there is no one exact figure, and it varies between $48 billion to $72 billion dependent on whom you ask.
A number of drivers and customers: 3 million drivers globally, estimated only since Uber does not divulge its data. The number of customers is estimated to be around 75 million. There have been speculative reports of 7 million drivers, but this includes drivers that worked for up to 6 months and no longer work for Uber. Another issue with estimating these figures is that Uber is constantly expanding in new markets while contracting in others.
Lyft:
Founded in 2012 in California.
Size: Approx. 300 cities in the US and Canada, employs around 1,600 employees.
Value: around $11 billion.
A number of drivers and customers: 400,000 drivers are estimated to drive for Lyft. An estimated 23 million customers. As with Uber, Lyft retains its data, so exact figures are unknown. However, it is easier to estimate Lyft than Uber since Lyft is only US & Canada based on any global initiatives.
Breakdown of the overview:
Uber is a global company valued at five to six times that of Lyft. It employees ten times the number of employees and is found in double the number of cities that Lyft. Uber also has a much larger service mix of products it provides its customers. The consensus is that while Uber is going through some extreme operational changes, it is still in a different league to Lyft.
Now that we know this as a fact, even when a lot of the data is hidden by both companies, lets take a look at the in-depth differences between the two companies.
The 7 Categories
1. Pricing
If there is one sector that both companies vie over constantly, it is the price per fare. There is a constant price battle going on between the two companies, and sometimes the differences are remarkable, in others instances negligible. Prices vary between cities, and this is due to the autonomy of local GM's that both companies employ to manage their local operations.
Basics: The base fare is around $1.00, and then the fare rises in increments of around $1.50 per mile and around $0.25 per minute. The average cost per mile including time and base fare works out at around $2.00, which is much lower than a taxi's and is the main reason why both companies have succeeded.
Uber and Lyft use dynamic pricing as the algorithm for determining the price of the fare, and this includes the use of saturation (demand) of customers to create a surge (Uber) or prime time (Lyft) price that is added as a multiple of the fare. So, in some instances, a mile cost can go up to $6 with an x3 factor. This is where they lose out to taxi's which have a standard fare price that only changes at night.
Uber Surge Pricing
Surge is a standard multiplier, no fancy mathematics involved. The demand increases the surge price, so you can get x1.5, x2, x3 and even more.
Lyft Prime Time
Primetime is a percentage ration-based calculation making it more diverse that surge. This means that rather than a straightforward incremental rate, they charge a percentage increase of the fare, such as 50% or 100%.
In essence, both are the same, since a % is also a multiplier, it's just another way of presenting the equation to the customer, after all, x2 is 100%.
Up Front Estimations/Pricing
Up front estimations became important for customers hat demanded to estimate the cost of the fare before taking it. While passengers would not demand this from taxi's, they have become spoiled by the access to app technology. Uber and Lyft let customers know when there is a price surge in the estimation screen and will also give them an upfront pricing for the ride too. The customer can choose whether to accept the pricing or rely on the actual ride fare, which is usually the better option.
In direct comparison, Lyft always wins in pricing; it is a cheaper service.
Driver Earnings
Lyft drivers earn more than Uber drivers. While Uber sign-up bonuses are significantly higher, the daily income is less. Uber charges a higher commission from their drviers, and Lyft offers more incentives during the day to their drivers that includes Power Zones and rush hour opportunities. Lyft per-determines these bonuses, while Uber links the surging income to real time saturation, so Uber drivers don't really know when and where an income factor will increase during their shift. Uber recently introduced the continuous driving bonus, but we have yet to ascertain its added benefit to driver's income.
My Take
Its all a matter of demand during the usual day's where a customer will pick the company that sends a car faster for pick-up. During peak hours, Lyft is cheaper.
Lyft wins in both pricing and driver income satisfaction.
2. The App
Uber just recently changed their app, and it has introduced some interesting new features. Both apps are basically similar in approach, and they both perform one function, they connect customers to drivers.
Uber's app has much more functionality and access to services that Lyft does not have, and this is apparent due to the difference in both size and market mix that Uber offers its customers.
The big differences are in operational and tipping.
Uber does not allow passengers to "stop-off" during a ride, while Lyft does allow this. Uber's tipping screen is after the rating screen.
Uber's app shows the rider what the expected ride will cost them and offers an option to accept the estimated ride.
The apps are both easy to use and store information that makes using them even easier, such as credit card data. For drivers, the app is also used as an interface to all their ride data for use when calculating tax returns.
My Take:
Both apps are so similar, even the new changes that Uber introduced don't really make it more or less than Lyft's app. It all falls down to personal preference.
This is a tie.
3. Service Options
This is where the differences between the two companies become apparent.
Uber provides a much larger market mix of services, and I will concentrate on ridesharing and not include all the other Uber options.
Uber
- UberBLACK black luxury vehicles
- UberKIDS a car with a child safety seat
- HopSkipDrive, and Uber partnership that offers a driver-nanny service for kids aged 6 and above
- UberPETS allows for pet transport
- Express POOL, new shuttle service that is the cheapest Uber offers in select cities.
- UberPOOL, a standard pool service for more than 2 unique passengers
- UberPOP a compact or subcompact car
- UberSELECT a superior high-end car
- UberSUV an SUV
- UberLUX found in limited markets offers access to unique super and hyper-cars
- UberX the standard ride service
- UberXL a larger car that can seat up to 6 passengers
- UberWAV a wheelchair accessible vehicle
- UberTAXI, offered in some markets, is Uber's taxi app (like Gett)
- Uber Bike, a bike rideshares found in a few markets
- UberEspaniol, a rideshare driver that speaks Spanish
- Uber Rent, a peer-to-peer carsharing service available in San Francisco
Lyft
- Lyft Line, their cheapest shuttle service
- Lyft their basic ridesharing service
- Lyft Plus a larger car that can seat up to 6 passengers
- Lyft Premier similar to UberBlack
- Lyft Lux their top service providing a high-end expensive car ride
The biggest differences apart from the larger variety of services that Uber provides are in the service itself. This is noticeable in the more luxury rides both services offer. Uber drivers tend to be more professional in their approach when providing a high-end service. Lyft drivers retain their friendly presence and atmosphere. Lyft promotes individualism, while Uber promotes driving.
Both companies provide screened drivers that offer a secure driving experience. If you want a lighter ride, go for Lyft, if you are seeking a more business-like ride, choose one of Uber's options.
Drivers for UberBlack get paid significantly more than Lyft or UberX rides. While there are less UberBlack rides in most markets, cities such as LA, SF, Chicago, Washington, Houston, and NYC do have lucrative markets for these types of rides.
My Take:
While Lyft can be cheaper, the accessibility to so many Uber options in so many markets gives them the advantages. That is why Uber wins hands down I this category.
4. Support Services
Support services are split into two distinct types: Customer and Driver support.
Customer Support is only reachable by e-mail, in-app help and website help screens and forms. Both companies for some reason don't let customers talk to a rep. However, Lyft is more helpful, where most times the answers will be formulated by a customer support representative somewhere in the world, Uber's answers tend to be automated copy paste of a help screen.
Driver support is much better, Uber has phone access and well as Greenlight hubs in some markets that give their drivers access to an actual, real living human being. I find that driver support is better for both companies that customer support, but Uber’s driver support is better than Lyft’s.
My Take
Lyft customers enjoy a better service than Uber's customers. Uber's drivers enjoy a better service than Lyft's drviers. There is no definite winner; if you are a customer than Lyft wins, if you are a driver than Uber wins, it's all matter of perspective.
5. Coverage Areas
Uber is by far the larger of the two companies and reaches more areas in the world and the US. Uber is found all over the US in 46 states, just as Lyft is. The difference is in the percentage of coverage, where Uber accounts for 70% of the US market, Lyft has 30%. This is the percentage in ridesharing only.
You will always find both services readily available in all major cities, but once you start going outwards towards the boonies, you end up relying more on Uber than Lyft.
The bottom line is that passengers will enjoy Uber rides anywhere and everywhere in the 46 US states, and 24/7 in most cases. Lyft passengers will be limited to more saturated markets, such as major cities and routes between major cities. Uber also provides a much larger variety of services.
My Take:
Uber's financial reserves and the fact that it went all blitzkrieg during Travis Kalanick's years as the Uber leader gave it an exponential advantage over Lyft, which took its time to grow. So this is an obvious win for Uber.
6. Innovation
Money is a not the only reason for innovation, but it does fuel the transfer of ideas from the mind to reality. This is why Uber has a marked advantage over Lyft. Uber's hand is in many pies, and its global reaches has given it access to many new ideas that are found in Asia and Europe. Uber has truck partnerships with other leading rideshare companies such as Didi Chuxing and Grab. They have a load of subsidiaries; some are still active, others have closed down. Uber has also expanded out of ridesharing into other revenue sources that complement customers access to new services such as e-pay, e-commerce, and freight. Both companies are invested in AV research, although Uber took a step back recently due to the death of a pedestrian in Arizona. Both companies will suffer in this arena as automakers start to force middle-companies such as Uber and Lyft out of the market.
Uber recently came out with a new app, so we still have to give this time to prove its profitability to both Uber and the driver.
Both companies are introducing healthcare and Medicare services to health insurance customers. Uber has expanded into the bike-share sector in the US and is also involved in freight. Freight is suffering due to a lack of drivers.
Uber usually leads with innovations, and Lyft follows through after learning from the Uber experience.
My Take:
Although both companies do work hard in introducing new concepts and improving the driving experience for passengers and drivers alike, Uber has the advantage. Their size, financial resources, and corporate culture make them the stark leader in innovation. So, Uber wins in this category.
7. Brand Image
This is obviously going to hurt Uber drivers, but then all of us Uber drviers know the truth anyway. Uber has a very bad image, which is the product of years under Travis Kalanick's idiotic corporate culture that was best suited for a Viking war boat than a transportation company. In fact, when you consider it, the old Uber would have been a perfect Viking tribe.
Uber's image was hurt even more with Waymo, the Hack case and the fact that they disregarded regulators in just about every state and country. Add to this the recent AV pedestrian death in Arizona and the new CEO Dara Khosrowshahi has got his hands full trying to change the corporate image. He is succeeding, but it's a slow and painful period.
Lyft, on the other hand, has had a steady, yet the slow growth of image and brand. They are considered a solid and comfortable service provider. This is OK when trying to sell granny chairs, but when dealing with the cutthroat world of stealing income for taxi drivers and outdoing the Uber Vikings, it can prove to be a not so successful system. However, reality dictates that brand image is about how we perceive a company and not how successful it is, in Lyft’s case both apply, it is perceived as being a great company and its doubled its US presence in 2017, from 15% to 30% of the market.
My Take:
Lyft wins hands down in the battle of the image.
Conclusions
Uber is the bigger, stronger and more comprehensive service. Uber has more money, more popularity and is a global company.
Lyft is more solid, more thoughtful and considerate (or so they seem to be).
In reality, both companies only care for bottom line figures, and while Lyft has a longer history of caring for its drivers, Uber has caught up under Khosrowshahi. Uber is by far in a different league, and while these two companies do control the share of the US market, the only comparison I can give between the two is the difference between McDonald’s and Wendy’s. Where McDonald’s is global, and the largest in the world, Wendy’s is local. Both have a great presence, but honestly, you cannot compare n size, only in taste and price. This is the same with Uber and Lyft; there is no comparison in size only in service and price.
My take:
Uber wins hands down, and the reason is simply due to this, customers and drivers can use both services. Customers will always get a better service mix from Uber, but a lower Lyft price. Drivers will earn more with Lyft, but UberBlack and other such services can only be found at Uber. So, what makes the difference: Sheer size, Uber is still 70% of the market, and that's the ultimate test of success. If a service is bad it will end, look at Sears in the face of Amazon. Sears could have changed their business model to that of Amazon but didn't, just as Nokia fell for the same reason. Uber is neither Sears nor Nokia, and as such, Lyft will most probably remain the younger brother.