Lyft is finally fixing the worst part of calling a car - heaping more pressure on Uber
Lyft is rolling out a new service that aims to help limit one of the most unpopular aspects of its service - surge pricing.
The ride-sharing app is rolling out a 'price lock' feature aimed at daily commuters to stop the cost of rides spiking during peak times.
Surge pricing, used by companies such as Lyft and Uber, is the act of adjusting the cost of a ride based on demand at the time and the availability of drivers.
CEO David Risher told analysts on a recent earnings call the company will aim to 'open up a can of whoop ass' on the rideshare app's 'most hated feature.'
To unlock the set prices customers will have to pay a monthly subscription of less than $5 'that caps the price for a specific route at a specific time,' according to Risher.
'Reliable pricing is particularly important to them because they know what their ride should cost and hate it when prices change,' Risher explained.
Lyft acknowledges that its users hate surge prices and is introducing a new feature to tackle it
The permanent price for the subscription has not yet been set, but it is showing up as $2.99 per month for some users.
Lyft's new feature will not completely do away with dynamic pricing but it 'can chip away at how often it occurs' and give riders 'a reason to choose Lyft,' according to Risher.
The move is a challenge to Lyft's biggest rival Uber, who have been strongly criticized by its customers for surge pricing.
'I take the same ride to work 5 days a week, and Lyft just offered me a $2.99 monthly subscription to guarantee I only pay $8.92 for my work commute,' one user wrote about their experience on Reddit.
'I honestly went for it because it seemed like a great deal as opposed to the occasional $10-$14 when it’s a busier day,' they explained.
'I grab a ride to work between 4:15 and 4:45 AM 4-5 days a week and they offered it to me for $8.37 when I’ve been paying between $16 and $24 depending,' another said positively of the subscription.
However, others reported glitches in the price settings with one complaining that their price was supposed to be set at $9.50 but reverted to costing $19.98 unexpectedly.
'I made sure I was still paying the $2.99,' the Reddit user explained, but the price still spiked.
The new feature comes as Lyft's second-quarter earnings gave a weaker than expected outlook for the third quarter.
The move is a direct challenge to its rival Uber that also uses so-called dynamic pricing
Despite beating expectations on earnings the projection sent Lyft's stock tumbling 17 percent on the day.
The company's stock is currently down 29 percent year-to-date, trading at around $10 a share.
By contrast Uber had a more positive second quarter results making $10.7 billion in revenue for the quarter beating the $10.57 billion estimate. The company's stock price is up 17 percent year-to-date.
Uber now accounts for 76 percent of US rideshare spending while Lyft occupies 24 percent, according to Bloomberg.
