What is Lyft’s Prime Time Pricing?

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Many rideshare users may be familiar with Uber’s “Surge Pricing” but did you know that Lyft has a similar service, which they call Prime Time Pricing? 

What is Prime Time?

According to Lyft, Prime Time pricing occurs when the demand for Lyft rides is greater than the number of Lyft drivers on the road.

Why does Lyft have Prime Time? 

Similar to Uber’s surge pricing, Prime Time encourages drivers to go out and complete rides when the demand for rides is high. In order to meet the excess demand at certain busy times of the day, Prime Time serves as a way to get more Lyft drivers on the road and getting passengers where they need to go, and in return passengers are charged an additional percentage on top of the original ride price. 

How is it calculated?

At the end of your ride, Prime Time adds a pre-determined percentage of your base ride amount. This is calculated prior to the Trust and Safety fee as well as taxes and airport fees. The specific percent is calculated based on a function of supply and demand (if demand is much higher than supply, the increased percentage will reflect this).

How do you know when it’s Prime Time?

For passengers, on your initial ride request screen the Prime Time notification will appear if the pricing is in effect. It will also indicate the Prime Time percentage, and you have to accept the higher fare before requesting a Lyft ride. 

 

 

 

 

 

 

 

 

 

 

 

Is it good for Lyft drivers?

Prime Time pricing allows Lyft drivers to earn more money depending on how/when the Prime Time pricing occurs. On the Lyft App for drivers, a heat map shows that allows riders to see where the demand for rides is the highest.  As pictured below, the shaded areas display where the Prime Time is in effect for drivers. 

 

 

 

 

 

 

 

 

 

 

 

How is it different from Uber Surge Pricing?

Prime Time Pricing is very similar to Uber’s Surge Pricing, except Prime Time pricing uses a percentage, whereas Uber Surge Pricing reflects the fare increase by the amount it will be multiplied (i.e. 2X the normal fare). Another difference between the two pricing tactics is that generally, Uber tends to have higher surge rates than Lyft when it gets busy. It is also easier to avoid Prime Time than Surge Pricing because the areas where Prime Time is enacted are usually smaller than the Surge Pricing area.

For more information on Uber Surge Pricing check out our article here: http://www.taxifarefinder.co/newsroom/?p=3775

Felicia is an intern at Unleashed, LLC. She is from upstate NY, and is currently pursuing a Marketing degree at Bentley University. One day she hopes to travel the world and visit every continent.

Would Uber Be Better Without Surge Pricing?

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Over the past couple years, the term ‘surge’ has taken on a whole new meaning.  If you’re not familiar with why it’s so famous, surge is a feature of the popular ridesharing app Uber, and it signifies increased pricing during times of high demand.

According to Uber’s website, “At times of high demand, the number of drivers we can connect you with becomes limited. As a result, prices increase to encourage more drivers to become available.”  On the surface, it sounds simple enough: when demand for rides outweighs available drivers, Uber raises prices to get more drivers on the road.

But as research has proven, surge actually turns out to be more of a re-distribution of drivers than anything else.  And veteran Uber drivers know that it’s a fool’s errand to chase the surge.

Christian Perea, an Uber driver who’s driven in three major cities, told me, “Wise drivers do not chase surge. They do their homework and patiently anticipate it. I only move towards surge areas if they are within five minutes driving distance or if I know that there is a high likelihood of consistent surge for a period of time.”

Would Uber Be Better Without Surge Pricing?

So When Does Surge Work?

Since surge pricing can be so dynamic, it doesn’t work all that well to get drivers off the couch (because it could easily disappear after just one ride).  But it does entice drivers to come out during the biggest events (like New Years or Lollapalooza) and during the busiest times (like the Saturday night closing bar rush when everyone wants to get home).

Driving the party hours (Friday and Saturday nights) is notorious for unruly passengers and drunken rides but there also tends to be a lot of surge.  Uber drivers work these hours because they anticipate increased demand and surge pricing.  I know that I wouldn’t drive a bunch of drunks around until 3 am if I could make the same amount at 2 pm on a Friday.

But while drivers tend to love surge, those same feelings are rarely shared by passengers.  New Year’s Eve is often a prime example of this with fares surging all the way up to 8.9x in certain parts of the country.  A quick sampling on Twitter would tell you that there were a lot of pissed off passengers too.

But Surge Is Great For Drivers Right?

You might think that an Uber driver who earns $89 for a fare that normally costs $10 would be happy about that.  But to them, it feels like Uber is going overboard.

Perea told me, “Surge isn’t as important to me.  I would rather see higher base fares and minimum fares. A driver should get $5 from each ride, seeing payouts for $3.20 on a minimum fare is outright insulting. Especially since they occur often in densely populated areas where it is most difficult and dangerous to drive.”

Perea is referring to the fact that on a $5 minimum fare, drivers only receive a $3.20 payout after Uber’s $1 safe rides fee and 20% commission.  It’s also interesting to note that fares have been cut up to 50% in certain cities like San Francisco over the past year so a 2.0x surge fare today is actually the same price as a regular ride was last year.

Should Surge Be Capped?

This week, NYC Mayor, Bill de Blasio, fresh off a swift defeat at the hands of Uber, proposed a cap on Uber’s surge pricing.  His last tussle with Uber involved limiting the number of Uber cars available in NYC but that was met by a flurry of lobbying from Uber and pressure from NYC residents.  Ultimately, De Blasio backed down on that initiative.

This new strategy to limit surge appears on the surface to target and win over consumers who have legitimate gripes about surge pricing.  But again, it could end up back-firing.  Without surge, there is really no incentive for drivers to be out on the road during times of peak demand which means rides aren’t even available for customers.

Uber has also made it very clear that they oppose any and all restrictions that would cap fares during times other than an emergency like an earthquake.

Should Uber Get Rid of Surge?

Uber is one of the most consumer-friendly companies out there today.  But the one area where they’ve refused to back down from, is surge, which tells me they must know something that we don’t.  According to a blog post by Bill Gurley in 2014, Uber recognized this problem early on.

Many of their drivers were logging off and going home at 1 am, just as all of the partygoers needed a ride home.  Asking drivers nicely to stay online didn’t work, but when they offered a 2-3x premium, low and behold, 2/3 of their unfilled requests were now being filled.  It turned out that drivers were responding to price elasticity.

Gurley also noted that “the next time you see a message indicating that Uber’s surge pricing is in effect: immediately try an alternative other than Uber. In other words, try to hail a cab, call a traditional black car service, find a rental car, or jump on a bus or subway. You will find that availability and reliability for all forms of transportation are under stress at that same precise moment in time. At these times, a fixed price taxi will be highly unavailable, and a fixed price subway will be remarkably over-crowded.”

And there in lies the reason why Uber shouldn’t ever get rid of surge and won’t.  Uber’s number one priority is being reliable and surge pricing makes it so that you can always get a ride when you need it.

There are a lot of passengers who complain about surge pricing but clearly they are still willing to pay it (otherwise they wouldn’t have taken the ride in the first place).  Uber has even gone to great lengths to make sure that riders understand and are aware of surge pricing.  Riders have to physically type in the surge multiplier when requesting a surge ride and they also now have the option of being notified once the surge goes down.

All of these changes have made surge more rider friendly and although it’s still an aggravating feature of Uber, it appears as if it’s an essential part of balancing supply and demand.

 

About Harry Campbell, The RideShare Guy

Hello TFF Readers, my name is Harry Campbell and I run a blog for rideshare drivers called The Rideshare Guy and I also write about the on demand economy for Forbes.  I’ll be sharing articles from time to time on what’s going on in the world of rideshare and what you need to know as a passenger whether you enjoy taxis, rideshare or all of the above!

 

New Rideshare Service – Bandwagon

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The rideshare industry has truly become a modern day phenomenon that is continually growing and expanding beyond many experts expectations. With such promising growth and revenue, new rideshare companies are incessantly entering the scene hoping to catch a piece of the prize. With many new companies in one industry, it can be hard to fully understand what makes each company unique. Our team at TaxiFareFinder works hard to research and share industry trends and information on the numerous new rideshare companies to help educate our readers and make sure everyone is aware of their rideshare options! Today we are focusing on a brand new company, Bandwagon.

The Bandwagon app, is principally a way for taxi passengers who are heading in the same direction to connect with one another to share a taxi ride, saving the users time and money. This app was mainly designed for passengers who tend to wait in long taxi lines at airports or other crowded venues like convention centers, and is currently managing taxi lines during peak travel periods at Laguardia Airport through a contract with the Port Authority of New York & New Jersey. Bandwagon boasts that it reduces the ‘curb crunch’ in taxi lines and gets everyone to their destination faster, all while decreasing CO2 emissions! While Bandwagon is a rideshare company it does not have its own fleet of cars or drivers, instead it uses the regulated taxi system in each city.

Once a user opens their app and plugs in their location/destination, the app searches for others in the same location (ideally in the same taxi line) who are heading similar ways. Matched passengers can then text each other to meet up. Bandwagon, does ensure that you will never go more than 20% out of your desired trip route by sharing a cab with fellow Bandwagon users! Payment is fairly basic and works like this; Bandwagon will calculate how much each passenger owes and the last person to be dropped off is to collect the money throughout the ride from each passenger and pay the driver at the end of the trip when they exit the vehicle. While users can send other users money via credit card for their portion of the trip through the app, or reimburse eachother in cash if they choose, there is currently no way to pay your taxi driver through the app. Also it is important to note that Bandwagon does charge a small fee ($1) for the service. If all goes well at LaGuardia, Bandwagon will roll out at JFK and the rest of Newark Airport. (Currently they are available at Newark Terminal C only through a partnership with United Airlines.)

One benefit of Bandwagon is it claims that it will currently work in any location where there is heavy taxi usage, meaning there is no waiting for this app to arrive in your city! Also they recently rolled out a new feature that lets you book shared cab rides in advance on Bandwagon’s app. Have you tried Bandwagon yet? Let us know your thoughts below!

How to Use RideShare Apps (Video)

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New to rideshares? Not sure how to sign up and call one? TaxiFareFinder created this helpful video to show you how to download the app, sign up, and start using rideshares like Uber and Lyft. Happy Traveling!

For more information on rideshares, make sure to check out our helpful Rideshare Guides. (http://www.taxifarefinder.com/rideguru)