Uber Surge and Lyft Prime Time – What’s the Difference?
Both Uber and Lyft have a version of what Uber originally called “surge” pricing. Lyft followed with the same thing but they call it “Prime Time.” We find that “surge” is a better descriptive name so we’ll default to that mostly here. But when we talk about surges, we’re also talking about Lyft’s Prime Time pricing.
Uber founder Travis Kalanick, who is a strong believer in free markets, developed the idea of surge pricing. It’s an increase in the normal price when there is more demand than there is supply. Or, when there are more riders looking for a car than there are drivers available to service them.
Equilibrium: The Real Goal of Uber’s Surge Pricing
The idea behind it was a good one even if its implementation ultimately didn’t really accomplish the goal of making sure everyone who wanted a ride got one. Kalanick used to explain that the purpose of surge pricing was to produce an equilibrium, or a balance between supply and demand.
Normally, when people heard him say that they thought he meant that the higher prices were intended to bring in so many drivers that the demand would soon be met. And that was part of it, but it wasn’t the whole story.
The rest of the story is that Kalanick not only intended for the higher prices to motivate more drivers to come into an area – but he also intended for the higher prices to encourage more riders to shut off the app and stop looking for a ride! That’s right! And that’s because, for him, equilibrium was the ultimate goal. Achieving equilibrium between the number of passengers who were requesting a ride with the number of drivers available was the goal.
And it didn’t matter to him if that was achieved because a lot of potential riders canceled their request because the price was too high. Or, if it was achieved because more Uber drivers came into the area. In fact, he intended for both of those things to happen and he called it a success when they did. The ultimate goal was to have an equal number of drivers to the number of passengers who were looking for a car.
Since the result he sought was to provide a ride for every single person who wanted one, he could achieve that by causing a lot of riders to cancel their ride requests because the price was too high.
Every time somebody canceled a request, he could mark that as one rider who no longer “wanted” a ride. Although, we all know they still wanted one, but as long as they quit trying to put a request through, supply and demand would come back into balance and Kalanick’s ultimate goal of equilibrium would be achieved.
It was a mathematical problem that came with a mathematical solution. That solution, however, did not focus on the human element. It paid no attention to the fact that it angered a lot of people who really did want a ride but could no longer afford one. If you could afford it, though, it was a great solution because you could always get a car. Those who couldn’t afford it would just have to wait a few extra minutes for the prices to come down.
How Surge Pricing Affects Driver Pay and Behavior
While surge pricing is generally nothing but an annoyance for people looking for an Uber or Lyft ride, if it didn’t exist there would be a lot fewer drivers. Surge pricing has, in fact, made it possible for many Uber and Lyft drivers to make just enough to keep them driving. But without surge pricing, those drivers would have dropped off the service a long time ago.
Another way this pricing affects drivers is that it is something they take into consideration while strategizing the best methods to make money on any given day.
Drivers who don’t take surge pricing into account will miss out on a lot of potential prime time earnings. In fact, surge pricing should be one of the major considerations drivers take into account when planning their day and week.
How to Plan for the Surge
You may ask, how is it possible to plan a strategy around surges when surges just come up randomly when there aren’t enough drivers?
Well, it is true that there are often surges at times and places where no one could have predicted. But for the most part, surges are fairly predictable.
The Best Times for Surges
- Morning and evening rush hours
- After big concerts or sporting events
- Anytime it rains or snows, especially if the bad weather wasn’t predicted well in advance
- Late Friday and Saturday nights in the bar districts
- Major holidays when people are out (New Year’s Eve is the best example)
So yes, there are many times when it is almost 100 percent certain that there will be surges. Our certainty is based on past experience. And you can improve your ability to predict surges by becoming an obsessive app watcher!
Watch the Uber and Lyft driver apps all the time, when you’re driving and when you’re not driving. You really have to become kind of obsessive about it. But you want to watch the heat maps for surges and when you see them, you’ll either want to make a mental note or a written note about what time they occurred, how long they lasted, and what caused them. Written notes are best, of course. In fact, if you can do an Excel spreadsheet, that would be even better because you can make graphs and sort the data in all kinds of helpful ways.
If you see a surge on a Wednesday evening at 11:00 p.m. near a concert venue, it’s a pretty good bet there was a big concert there and it just let out. So, make a note of that: Whenever there’s a big concert, it surges.
Also, keep notes on early morning surges and where they’re located. You might discover an area in a far-out suburb that surges almost every morning around 6:00 a.m. You could discover that there are a lot of people leaving at that time to go into town for work or to head for the airport. That’s something to make a note of as well.
Monitoring the surges will show you places where there are chronic shortages of drivers at certain times. That’s what the surges reveal. When you see the same place light up in red around the same time every day or every week, make a note and plan to be there next time!
This is a really exciting video because I want to teach you what surge and Prime Time is. Surge and Prime Time are the same things using different names. Prime Time is what Lyft calls it. Surge and Prime Time, just to explain real quick, is basic supply and demand.
When there are more apps that are open, either requesting or just even looking at requesting, than there are drivers in the area, algorithms will push up the price, which is created to cause drivers to either turn on their apps or migrate over to that direction so that they can meet the demand.
Now, this is something that people often hate about Uber and Lyft because they will get sometimes really, really hefty fines. But the alternative is that no one comes, and you’ll get the dreaded “No Drivers Available” sign.
So this is what it looks like for Lyft. Now, Lyft makes the city into little blocks. And so right now, right here, right above Mill City in Minneapolis, in the heart of Minneapolis, there’s a lot of demand.
And if you look at the top of the screen, it says, “25 percent to 100 percent more.” Now, Lyft has percentages. Uber does multipliers. Okay?
Just keep in mind, so a 100 percent is what Uber would say, “2X surges.” And 300 percent would be “4X surge.” Okay? The darker the color, the higher the fare.
Now, not all Lyft apps, they’re testing this out, show the actual percentages. This square, this large blue square here that you see in Uptown, 10 percent up here in Minneapolis 10 percent, this is called a prime zone, which means this is a designated place.
Until 6:00 p.m., every ride made in that time is going to have an additional 10 percent. Okay? This is a special thing that Uber and Lyft both do. And Lyft has, at least in Minneapolis, consistently been doing it. Okay?
So that’s how it looks for Lyft. And, look, University of Minnesota area, Dinkytown, that has some surge too. Now, later on in other videos and my other advanced courses, I’ll teach you how to use other apps like Prime Time.
And this Prime Time app is tracking all these areas. It’s showing right now that there is a surge, 75 percent Target Field, 50 percent Dinkytown. And this is something I’ll show you guys in another video.
Now, let’s look at Uber. Uber is a little different. Uber has things just like Lyft. The darker it is, the more [of a] surge it is. So you can see this little scale. Don’t be deceived by the three.
The three, it could be 30. I mean, it never has it been 30, but there is no cap to search. Search is just all automatic with a computer. And so, right here, if you notice, it doesn’t…Uber has a large, way, way larger swab of search.
They don’t do it in small little bite size. So if you have a lot of demand to one area, let’s say right here, Boom Island, it will trigger search over here.
Now, the cool thing about Uber is that if you go scrolling close, you can actually see the specific percentages. So 1.4X would be a $1.40 a mile from Minneapolis instead of a normal dollar. And also you’re multiplying the, also, waiting time.
Notice that it is only 1.4 while Lyft in many places is a lot higher. Let’s go to the Prime Time app to show you. So 75 percent would be $1.75. And if you look at the Uber app, there is not one area right now that’s $1.75.
And so that’s very cool. So keep in mind, and then we will talk about this in other advanced courses, keep in mind going back and forth to the apps which one has the better surge that will give you the best bang for your buck.
Also, notice, there is no prime zone here. There is no boost. Uber calls it Boost. There is no boost here. And if you want to see a boost, you go to Earnings [then] Promotions.
If you noticed the zero, I haven’t worked this week. Promotions, and under promotions they will show you if there’s any boost. And there are no boosts right now. Okay?
So that is a basic crash course on how surge and in future courses, the more advanced ones, I’ll teach you how to maximize surge. But knowing this is helpful enough.
And the final tip I’ll give you, and this is a freebie is that if you were…
Oh, look, it just changed. This is part of my tip. Great example, great, great segue.
You see how it just changed? Surge and Prime Time change every couple of minutes. And so basically, that’s why it’s so important never to chase surge.
So let’s say that all over the way over here in Minnehaha Regional Park. Let’s just say you’re there or you’re at the airport. Like, “Oh, snap. Downtown is surging.”
Well, it will probably take you 20 minutes to get downtown from there and by then, it will be completely different. It may be more. It may be nothing.
And so you never want to chase surge pricing. You want to anticipate surge. You want to know where to be at the right time. So you only chase surge if you’re only just like a few blocks away.
Other than that, you’re going to be wasting money because all the other drivers who aren’t thinking and aren’t smart about the way they’re driving, they’re going to be all gravitating towards there, and they’re going to do the same thing.
And, you know, in fact, I’ll just show you real quick. I’m going to open the Lyft app. And I’m going to show you the people. Well, this is all extra stuff.
This is all stuff that I’ll show you in the advanced course. And sometimes, I can even… See this car is moving? He’s trying to get to the hot action over there.
And if you keep looking around, and if I wanted to spend the time, you literally see cars driving over to that direction. You can track them.
This is often really clear to see if you look at the airport. So here’s Minneapolis Airport. If there’s surge going on here, you’ll see all these people on the highway on 62 and over here just driving [and] trying to get there.
And so it’s really, really comical. So don’t be that person. Don’t chase surge. Anticipate surge. Hopefully, this is helpful.
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