After announcing a major round of funding last week, ridesharing start-up Lyft has said it is immediately lowering the cost of rides in all its markets.
The company, which lets users hail rides from others through its smartphone app, said prices will be up to 20% lower in the 30 cities in which it operates. In Los Angeles, prices have decreased by about 20%, Lyft told The Times.
The price drop follows Lyft’s implementation of Happy Hour, a feature that drops the price of rides by up to 50% during times when demand for rides is low. The idea behind Happy Hour is that ride fares will be lower, but that the number of rides will increase, benefiting the company and its drivers.
Happy Hour was implemented last month, and so far, Lyft is calling it a success. The company believes the price drop announced this week will benefit it and drivers similarly.
“The goal is to increase market share during these busy months while providing the best ride at the most affordable price,” a company spokeswoman said in an email.
But for now, the price decrease is just a test. As a way to not alienate its drivers, Lyft announced that it would not take any commission from rides while it tested the new pricing structure -- Lyft normally takes 20% of all ride fares. The company did not say when the test would end.
For now, Lyft can afford to operate without collecting any revenue thanks to $250 million it received in funding recently, which was led by famed venture capitalist firm Andreessen Horowitz. Besides this price drop, Lyft said the funding will allow it to begin expanding internationally soon.