Lyft to ‘open money can’ on dynamic pricing

Ride-hailing giant Lyft will pilot a brand new feature called Price Lock that may let passengers purchase a monthly subscription “that locks in the price for a specific route over a specific period of time,” CEO David Risher said.

The feature is meant to address the problem of inconsistent dynamic pricing, particularly for commuters who use the Lyft app day-after-day. It’s a part of Lyft’s broader plan to “open the can of loot in prime time,” Risher said Wednesday in the course of the Lyft conference. Q2 results phone call.

“Primetime” is Lyft’s term for dynamic pricing, which is when ride-hailing platforms dynamically raise the costs of rides when demand is high or supply is low.

“Reliable pricing is especially important to them because they know how much a ride should cost and they hate price changes,” Risher added.

Lyft hasn’t provided much details about how the Price Lock economics will impact Lyft’s bottom line. However, Risher said Wednesday that a subscription will cost lower than $5 per 30 days. The feature is already available within the Lyft app and appears to cost $2.99 ​​per 30 days.

The company didn’t immediately respond to a request for more information concerning the feature or whether it might be included in Lyft’s important subscription platform, Lyft Pink.

The move toward “primetime” pricing is nothing recent for the corporate. A yr ago, Risher unveiled his plan to eliminate dynamic pricing so as to offer riders cheaper rides in a bid to persuade them to switch from Lyft’s biggest competitor, Uber.

Risher noted that “prime time will never completely disappear” because “it’s an important way to match supply and demand during periods of rapid growth.”

“But with innovations like price lock, we can gradually reduce the frequency of this and hopefully take what I think is the most hated feature of ridesharing and turn it into a reason to choose Lyft.”

Over the past yr, Lyft has made a concerted effort to reduce the variety of rides subject to dynamic pricing. Risher saw that number drop by 25% quarter-over-quarter, which he said contributes to higher conversion rates.

“In fact, the markets where we saw the biggest declines in prime time in Q2, like Phoenix, Baltimore and Orlando, are the markets where conversion rates are improving the most,” Risher said.

It was the primary quarter by which Lyft reported a GAAP profit, but that success was tempered by a weak third-quarter outlook. Lyft had forecast gross bookings, or the entire value of transactions, of $4 billion to $4.1 billion, barely below analyst estimates of $4.13 billion. (For comparison, Uber’s gross bookings within the second quarter were $20.6 billion, but Uber has a worldwide market share and Lyft is accessible only within the U.S. and Canada.) Its revised core profit forecast of $90 million to $95 million also fell in need of Wall Street’s $104.3 million goal.

Lyft noted that it expects gross bookings to grow barely faster than rides, partly since the reduction in dynamic pricing will impact gross bookings per ride.