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Ride-sharing Apps allow users to hail a car on command simply by tapping a few buttons on an app. Americans have fallen in love with these apps. Tons of millions of people use a ride-sharing service every year, creating an estimated $36 billion market. In the U.S, There are only two major players in the Ride-Sharing Companies: Uber and Lyft while Uber dominates the Market.
Introduction: Lyft RideShare App
Lyft RideShare App has carved out a very significant 39% of the Ride sharing market in the U.S. In this post, we are going to break down exactly how the Lyft App makes its money by turning tens of millions of riders into billions of dollars in revenue.
Lyft’s business is built on independent contractors that drive for the company and the company has to pay them, along with other expenses, to operate its business across the U.S. and Canada. That’s where Lyft’s rider fees come into play. The company charges riders a fee for using its services based on the length of the ride, the time of day and other factors. Lyft’s bookings, which is the amount the company collects from riders before it has to pay its drivers and other fees, totaled $8.1 billion in 2018. From those bookings, Lyft generated $2.2 billion in sales in 2018, more than double of what it was the year before. But despite its impressive bookings and fast-growing sales, Lyft actually lost $911 million in 2018.
Where did all that money go?
Lyft’s biggest expense is a company’s broad Cost of Revenue category, which includes everything from insurance costs to payment processing fees to web hosting and other technology expenses.
In 2018, the company’s Cost of Revenue was $1.2 billion. Additionally, Lyft has other expenses like: sales and marketing, research & development and administrative costs. When all of its expenses are cuddled up, Lyft spent $3.1 billion in 2018. But while Lyft is not profitable by now, there are significant signs of growth. For starters, Lyft has 30 million monthly active riders, which is up to 126% from 2016. And those riders are worth a lot more to the company than they used to be. At the end of 2017, Average revenue for Lyft’s per active rider was $27.34, but that figure jumped to $36.04 at the end of 2018.
Adding Payment Option
Before you book a ride, make sure you have entered a payment method into the app. To do this, tap the menu icon in the upper left-hand corner of the screen, and then tap “Payment.” Locate the “Payment methods” section and tap “Add payment method” to enter your payment details. To book a ride, start by tapping the “Search destination” field. Then, you can type in the address of where you want to go in the “destination field”. Once you have selected your destination, tap “Set destination.”
Different Option Available
Lyft offers you different car options, each that fit a different number of people and come with a different price tag. The typical options are Lyft, Lyft XL, Lux Black, and Lux Black XL. Lyft is usually the cheapest option. Lyft XL is more expensive, because these are bigger cars that have space for more passengers or extra luggage. Lux Black is a similar size car as a standard Lyft, but in a luxury vehicle. Similarly, Lux Black XL is a bigger size car, just like a Lyft XL, but is a luxury vehicle. Within each option, you can see the number of passengers that each car can easily fit, as well as your estimated arrival time at your destination and the time it will take for the car to pick you up from your current location. Under the Lyft option, you may see a drop-down menu where the pickup time is located. If you tap this drop-down, you will see that if you are willing to wait a little longer for your ride, you can get it for a cheaper price option. Once you have selected the option, tap “Select Lyft.” Lyft may ask you to confirm your pickup spot again, so the driver is clear on where to find you. Once your pickup location is set, tap “Confirm and request.” Lyft will then match you to a driver and will show you their live location as they make their way to your pickup spot. If you ever need to contact the driver as they are navigating to your pickup spot, you can tap the phone icon.
Riding in the Lyft
As the Lyft is arriving, you can confirm that it’s the right car by making sure the license plate and the model of the approaching car matches the license plate and model shown in the app. Once you are riding in the Lyft, you can follow your location live on the map and also see your live estimated arrival time. If you need to make any changes to the ride, you can tap “Edit ride.” You can cancel the ride, add a stop or edit the drop-off. You can also tap “Safety tools” to access different safety tools that Lyft offers during the ride and you can also share your ride location with anyone. Once the ride is over, You can give your driver a rating or a tip according to your experience.
What’s New for Lyft
Lyft is still in growth mode right now and it’s fighting hard against its largest ride-sharing rival, Uber. This ride-sharing battle likely means that Lyft will continue to spend lots of money on its business, at the expense of growing its bottom line. But the company has long-term plans to cut costs, such as using driverless cars to drive passengers around. The company is partnering with some self-driving tech companies, such as Aptiv, to test autonomous vehicles. Lyft and Aptiv are testing self-driving cars in Las Vegas and have already completed more than 30,000 self-driving rides to users. Using self-driving technology could reduce some of Lyft’s driver expenses, though the company says human drivers will always be a part of its business.
For now, Lyft is focused on generating more revenue from its regular riders & through new services like; scooter rentals and by boosting the amount of rides a user takes each month. So, rider fees it’s how Lyft actually makes money.
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