People hate surge pricing — and Lyft says it hears them. But other companies may just be getting started on the practice.
Lyft CEO David Risher said during a Wednesday earnings call that the company is seeking to address surge pricing by rolling out a feature known as Price Lock, a monthly subscription costing under $5 that “caps the price per specific route at a specific time,” meaning that customers who frequently ride from to the same location will have certainty on the cost.
The feature would compete with Uber by giving customers some certainty ahead of time as to how much they’ll pay for a ride; Risher said surge pricing is “probably rideshare’s most hated feature.”
“Reliable pricing is particularly important to them because they know what their ride should cost and hate it when prices change,” Risher said on the call. While surge pricing won’t completely go away, Risher said, Price Lock would help give frequent customers some pricing certainty they might not get elsewhere.
Surge pricing is a type of dynamic pricing that companies have experimented with for decades — not just Uber and Lyft, but airlines, gas stations, and concert tickets, too. Economists have told Business Insider that as algorithms get better and more retails adopt easily-changed digital price tags, customers could start seeing it in even more places.
Other companies, like Walmart and Kroger, have rolled out digital price tags, allowing the stores to change prices digitally rather than have employees manually switch out each tag. The companies have previously denied that the digital price tags would lead to surge pricing, but some experts and lawmakers are still concerned with their implications for the future of pricing.
“You could see a lot more instability,” Elizabeth Pancotti, the director of special initiatives at the left-leaning think tank Roosevelt Institute, previously told BI. “I think when you think about our macroeconomic tools, the Fed doesn’t have the ability to fight for price stability when they’re waging a war against digital price tags that can change every three seconds.”
Democratic Sens. Elizabeth Warren and Bob Casey also launched an investigation into Kroger’s price tags over their potential to surge prices. In an August 5 letter, they wrote that grocery stores employing digital price tags “introduce the potential for grocery giants to abuse their power and surge grocery prices, raising prices suddenly and at times when certain products are in highest demand.”
A Kroger spokesperson said in a statement to the Cincinnati Enquirer that “any test of electronic shelf tags is to lower prices more for customers where it matters most. To suggest otherwise is not true.”
It’s unclear how effective Lyft’s efforts to address surge pricing by giving customers a monthly subscription option will be — and whether it’ll become the more favorable rideshare app. But when looking at technological innovations at other big companies to make it easier to change prices, stable pricing likely won’t come anytime soon.
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