Simultaneous with the statements of Uber’s CEO Dara Khosrowshahi made during an economic conference, Lyft’s head, David Risher, penned a letter to the company’s shareholders, primarily saying that surge pricing is “deeply unpopular” with customers.
Why would it be if it seeks to urge passengers to pay more? Here’s the scoop.
‘Deeply unpopular’
In the most recent letter by Lyft to its shareholders, Risher stated that customers are most likely not to patronize Lyft’s surge pricing, even if it is meant to take them to their destinations quickly.
Lyft’s surge pricing, which the company officially calls PT or Prime Time, aims to balance out supply and demand by increasing prices when ride requests are high. The letter added that this incentivizes drivers to be online.
The company stated this is unpopular among customers, citing real-life examples of Risher trying to be a Lyft driver himself.
He shared how he would drive every six weeks or so, and encountered a passenger who told him she would regularly wake up early to check rideshare prices. If they are too high, she would choose to forgo the trip.
This scenario hit Risher like a truck, he wrote in the letter, saying how this habit “crystallized” in his mind, and he realized it was now time to break it.
Action steps
The only way to address passengers canceling the trip because of surge pricing is to introduce features meant to increase the drivers’ supply, which Lyft is doing now.
In February 2024, the company added its Earnings Commitment, guaranteeing rideshare drivers receive 70 percent of rider payments, after fees, and other features in October that provide a five-minute delay, out-of-your-way, and more transparent pay schemes.
Risher emphasized that by the end of 2024, these are good investments, that is, when drivers choose to drive with Lyft, and the figures are record-breaking. He added how Lyft drivers clocked in the highest number of driver hours during last year’s fourth quarter.
More ideas
Another way Lyft to eliminate surge pricing is to work harder on a Price Lock feature that will allow riders to lock in a price for rides they take frequently. For instance, why would you pay more for a cab route that takes you to the same workplace almost daily? See the logic?
Risher stated that this feature was a success. However, he buckled up, saying that those who are forced to accept surge pricing since they did not have another choice would never recommend Lyft to their friends. Oops.