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Lyft Cuts Prices Again, Fare War Continues

Lyft Cuts Prices Again, Fare War Continues

Three weeks ago, Uber announced fare cuts in some of their major cities, in response to some promotions by Lyft, continuing the fare war between the two companies. This afternoon, all Lyft drivers received an email from Lyft. Some emails said that prices were not going to be reduced but in others, they announced that they were “testing” a reduction in fares in their market. The prices are to be active today, but it is not yet reflected in the Lyft.com/cities/ pages yet.

[Update 9-25-2014 – Pricing has been released on the Lyft Cities Website, summarized in my post: Lyft Fare Cuts – Detailed Analysis]

Here is what I have seen so far:

Race to the Bottom

This is in a long series to price cuts starting back in May. It benefits the customers but deeply hurts the drivers. Lyft knows that since Uber cut their prices, they can cut theirs too to boost ridership without losing too many drivers. The only saving grace for Lyft is the Power Bonus, where drivers can earn up to a 20% increase by driving up to 50 hours a week. See this post for more information on the Power Bonus.

This is of course bad for drivers. We are all earning less now than before. However, the only thing to look forward to is more Prime Time Tips. Ever since the permanent price drop in all markets, demand has been high in many markets with more occurrence of Prime Time Tips. With the above price cuts, it is obvious that demand is higher in some cities than others.

More Cities off Donation Model

Along with the fare cuts, some cities will be moving off the donation model. Some cities are still under the donation model where passengers can pay whatever they want for the ride with the suggest donation as the price of the Lyft.

So far I have heard that the following cities are going off the donation model and to regular payments [I will update this post when I find out if any more cities are moving off of the donation model]:

Lyft should change all cities off of the donation model. It has roots as far back as Zimrides but most drivers do not like it and causes confusion with the passenger when mixed together with the pioneer ride credits.

How does the Fare Cut affect drivers?

For those full time drivers, this will no doubt decrease your earnings unless you can work very odd hours during the week (graveyard weekdays, Friday, Saturday nights, Sunday all day). For part time drivers, you will need to gauge the pricing week after week to see when it is the best time to work and how long to work for. It may be possible to earn as much as before all of the fare cuts with more Prime Time Tips. Usually if I work Friday nights, if I start around 6pm and work until 9pm, I can tell if it is going to be a busy night. Demand is usually throughout the night, with people going out then wanting a ride home later.

Did your city miss the most recent round of price cuts? Leave a comment below!

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