why is lyft so expensive now
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When Uber came in with its then-unique concept of ride-sharing a lot of people believed in its vision that car ownership would be a thing of the past. Uber sold its vision that people would share rides in its vehicles and not buy cars for personal ownership. This would lead to a society where one does not need to own and maintain cars and everybody’s transport needs would be met by Uber at a fraction of the usual cost. For a while, it did look possible that this grand vision would become a reality. When other ride-sharing companies like Lyft also became successful it looked like the future of transport had arrived. Then reality set in and then the Covid-19 pandemic followed. Things changed and now that utopian vision looks more unattainable than ever.

Good News after a While

 

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Now that the vaccines for Covid-19 are becoming available there is hope that ride-sharing may become popular again. Even though the business had dropped for both Uber and Lyft in 2020 by almost 50% during the peak months of the Covid-19 pandemic in 2020 things have got much better now. With many people believing that the worst of the pandemic is behind them the concept of sharing rides in cars may become popular again and Uber and Lyft might see a surge in business. Accordingly, in February 2021 the share prices of Uber and Lyft were up by 95% and 82% respectively from what they were six months earlier. That’s good news but people are asking – Why are Uber and Lyft so expensive now in 2021?

What is “Surge Pricing?”

 

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There are several reasons why Uber is so expensive today and why Lyft has gotten so expensive today. The main reason is the concept and practice of “surge pricing.” Uber practically invented this concept and other ride-sharing companies have adopted it. Surge pricing is based on the foundation of supply and demand. There are often times when a lot of people want a car ride but there are not enough Uber or Lyft cars on the roads. This may be due to peak traffic hours, a big event in the city like a Super Bowl game, a holiday, bad weather, or a political rally in that particular city. Then there are more people wanting a ride than there are available cars on the roads. Demand is much more than supply.

 

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So Uber and Lyft will increase their prices for giving a ride to take advantage of the increased demand and also this is a way to select which people get a ride. They are the people who are willing to pay a higher amount. It’s simply market forces at play even if it looks unfair to the people who can’t afford to pay the increased fare. Uber and Lyft tell the person asking for a ride in advance that the rates are higher so that they can agree on it beforehand. If they don’t then they simply have to wait and see if the rates go down. This is how “surge pricing” works and this is the reason Uber and Lyft rides are going to be more expensive in 2021.

Economic Recovery is Vital

 

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While car sales have risen in the last few months once ride-sharing is considered safe more people will use Uber and Lyft services than before. So demand will increase and if supply does not keep up the rates will increase. If Uber and Lyft want to make their services more accessible to people they have to encourage more car drivers to become part of their system. If the supply of cars increases then rates may come down. However, that looks unlikely unless the economy is revived and the business world sees an uplift. These are still issues that need to be resolved so it looks like that for the time being Uber and Lyft will become more expensive in 2021. The vision of a world where nobody needs to own cars on a personal level still seems far away!

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