Lyft to Eliminate Surge Pricing, Much to the Delight of Riders
Lyft intends to eliminate surge pricing in an effort to increase its number of riders. During the company’s earnings call for the second quarter, CEO David Risher acknowledged that this contentious practice is an undesirable way of raising prices, which riders strongly dislike.
Suge pricing, which Lyft calls Prime Times, typically kicks in when there aren’t enough drivers to meet demand. The idea is that recreational drivers smell an opportunity to make more money and be more inclined to jump in their car and work for a while. However, riders generally don’t like overcharging at all.
“We’re really trying to get rid of it,” Risher said. “Because we have such a good supply of drivers that we’ve worked so hard to get, it’s reduced significantly.”
A Lyft spokesperson told TechCrunch that its supply of drivers is the highest it has been in three years (since the start of the COVID-19 pandemic). Its number of drivers has increased by 20 percent from the previous year, and the average number of working hours for each driver is at a new record, surpassing the level of 2019. Risher said this has helped reduce the share of rides that affect fares by 35 percent compared to the previous quarter.
Perhaps unsurprisingly, Lyft makes less money. “But it’s good for our riders and it’s good for our overall market itself,” Risher noted.
Lyft has lowered prices to stay competitive with Uber and entice riders to use its service. The company’s turnover per rider decreased by five percent from the previous quarter. However, the number of active riders increased by nine percent.
