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Lyft Adds Option for Passengers to Get Upfront Pricing for Each Ride

Nov 29, 2016

Ride-hailing services are onto something: Removing the uncertainty of a ride's cost makes riders happier.

On Tuesday, Lyft followed in rival Uber's footsteps and added a feature that provides riders with upfront quotes for a given journey. The new feature will initially be available for Lyft riders in San Francisco, Los Angeles, Sacramento, Calif., Nashville, Dallas/Fort Worth, and Phoenix, with more cities to come.

The new feature takes Lyft's existing rough fare estimate option a step further. Now, a rider can input their pickup location and exact destination address, and get an exact price quote for their ride, not just an estimated price range.

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In June, Uber led the way when it introduced its own version of upfront pricing. For both services, the biggest benefit to riders is that they don't have to try to guess how much a ride will cost when "surge" or "prime time" pricing—using Uber and Lyft's respective terms—kicks in during times of high demand and hikes prices.

With that said, Lyft's upfront pricing might not be entirely guaranteed. In addition to changes in the route such as extra stops or a new destination, Lyft says that if "your ride takes more or less time than expected—the ride total you were quoted will no longer apply," effectively giving itself the ability to increase the price of a ride if it initially underestimates it.

This is notable because Uber's version of this feature has turned out to not be accurate all the time. Since Uber rolled out upfront pricing, some drivers have reported discrepancies between what a passenger paid for a ride and how much they were paid, even after accounting for Uber's cut from the fare. It turns out this happens because sometimes Uber's system overestimates how long a ride will take, so sometimes it pockets the difference between what the rider pays, and what the driver makes, which is always calculated based on the actual distance driven.

Uber told Fortune that more often, however, its system underestimates rides and ends up paying the driver more than the passenger's fare. The company couldn't provide data on how often either scenario happens.

So it seems that Lyft is trying to avoid something similar or at least leaving itself room to address this with its policy. The goal of the new option is to make it easier for passengers by "giving them the certainty of the final price upfront,"a Lyft spokeswoman told Fortune. "For drivers, that means the certainty that they'll be paid based on the time and distance they actually drive. There will be cases where the two don't align perfectly, but we'll be watching closely and making adjustments and improvements to get this right."

Lyft's new upfront pricing feature is optional, unlike Uber's, so if a passenger just wants to request a ride and not worry about getting a fare quote, that's still an option, the company said.

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