How Lyft works? Business & Revenue model explained

Ride-sharing industry is growing at an exponential rate, with more and more small business owners giving preference to ride-sharing services like Lyft instead of bearing car ownership expenses. Entrepreneurs were willing to invest in the ride-sharing business because global ride-sharing will reach 115 million in 2026.

No wonder why entrepreneurs are interested in this business! Let’s take a look at the business and revenue model of Lyft in this article.

What is Lyft?

Lyft is the second-largest taxi app in the USA and has a 32% market share. It has a business equal to Uber while Uber has a 71% market share in the United States. Lyft was founded in 2012 by Logan Green and John Zimmer. It has its headquarters in san Francisco. This on-demand taxi platform gives tough competition to other ride-sharing businesses. Let us see the working model of Lyft.

Lyft workflow

Lyft has two customer apps, one for drivers and another for riders. When riders want to make a commute from one place to another, they can book a taxi in Lyft for the commuting process.

When a booking is made by the rider through the rider app, then the nearby drivers get notified in the driver app. He needs to decide whether he is going to accept the ride based on his availability and convenience.

Business model of Lyft

Lyft has a peer-to-peer business model that connects riders with drivers,where it provides a marketplace to drivers. The business model of Lyft is based on base charge, per-mile cost, per-minute cost, covered distance, ride type, number of available drivers, demand for rides, and toll charges. And the exact payable amount is calculated by multiplying travel time with the cost per mile. After each payment, 20% goes to Lyft and 80% to the driver.

Partners

Major partners of this app include people who make operations smooth and easy, some of them are

Drivers with their own vehicles are the key partners.

API map providers allow drivers to optimize routes and riders to track the ride.

Payment processors receive payments from riders and make payouts to drivers.

Major activities of Lyft

The major activities of Lyft include product development and management, hiring drivers for full-time and part-time, developing relationships between rider and driver, managing driver payouts, and customer support.

Revenue model

The main revenue model of Lyft is its commission-based revenue system, Surge pricing, and Subscription/Premium charges.

Commission-based revenue system

The primary revenue system is based on the riding or booking charge from riders not only for Lyft every ride-sharing business keeps 20% of the fee paid by the rider and the rest goes to the driver.

Surge pricing

Surge pricing is another revenue model charged by Lyft in case of high demand. Heat maps in this app let the drivers identify the high-demand areas and make them accept the ride request from the areas. This considerably increases the revenue.

Express Drive Program

Lyft has added a new revenue model named Express Drive Program in which Lyft connects drivers who don’t own their vehicle with local car rental companies by renting vehicles from them. In this model, Lyft earns by assisting transactions between them. In addition to this Lyft added a new leaf to its revenue tree(i.e) self-driving program, riders can book bikes and scooters for commuting.

Subscription/Premium charges

“Lyft pink” is the subscription program of Lyft which offers $19.99 for months or $199 per year. Which becomes a great perk for riders.

This allows the customers to stay in the application for a long period and invite many customers globally.

Winding up

Hope you have got answers on how Lyft works and earns. If you are interested in building an app like Lyft then you are in the right place. Developing a taxi app like Lyft is an easy ride if you have a strong development team. As an entrepreneur, ready-made taxi app solutions would be the best option for you.

We developed Wooberly to bring your vision into reality. Wooberly is the exact taxi dispatching app solution you are searching for! It is a solution that can be customized according to your requirements.

Wooberly is a solution that gives you innovative features and a better user interface to run a successful taxi-dispatch business. And to your surprise, we have included some advanced features like “Ride Comfort Options” in which the riders can choose Women only drivers, baby seats, and wheelchair availability.