Who nailed their value proposition - UBER or Lyft?
Recently, Uber and Lyft, ostensibly the number one and number two ridesharing services, announced subscriptions. Both with the goal of retaining customers while providing reliable recurring revenue streams. Leaving aside brand preference, which one would be likely to win out in a head-to-head competition? To find out, let’s look at the offerings.
We’ll look at Lyft first since they announced first. Their subscription plan that rolled out on October sixteenth has been touted in some circles as the Netflix of rideshare. Except it isn’t. Netflix charges a relatively low fee for which you get unfettered access to everything they offer.
Lyft, on the other hand, charges $299 a month for which you get 30 rides at a rate of up to $15. However, if your ride goes over $15 you have to pay the difference. This deal is a fairly complex offering from a consumer standpoint.
Uber, who announced their subscription plan on October thirtieth and is currently limited to select cities, charges $14.99 a month ($24.99 in Los Angeles) grants you a discounted, locked rate for that month. Which means no surge pricing even if there is inclement weather or traffic jams. And, unlike Lyft, it features unlimited rides. Which sounds a lot more like Netflix than Lyft’s offer
The consumer optics
Even though the economics work out to be somewhat similar (I would argue that our scenario’s $87.26 a month is significant, but that may not always be the case.) So, which offer seems like a better deal on the surface?
- Up to 30 rides ($15 value or less — must pay the difference if the ride is over $15)
- $299 a month
- Unlimited rides
- Locked in, discounted rate
- $14.99 a month
Yep, Uber wins, hands down. At least from a consumer standpoint. Why? Because many consumers won’t do the math. They will see the seemingly high price point of Lyft’s plan then notice the complexity involved in how to frame that price and just give up. I’m not saying the math is hard, just that if we consumers can avoid work, we will. It is an important lesson to learn when it comes to positioning an offer and language.
The more easily “gettable” you make the offer, the better off you are. Only time will tell for sure but it seems that, unfortunately, Lyft chose the more confusing route.
P.S. With Tesla to slated to launch a ride-sharing late next year, it will be critical to getting the consumer value proposition right.