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Uber and Lyft Price Wars Could Take Their Toll

Uber announced a new fee while Lyft cut rates across the country. How will this affect the burgeoning ride-sharing market?
Uber Style

Uber and Lyft are driving in opposite directions when it comes to how much they charge you for a ride.

On Thursday, Uber announced that it would tack on a $1 “safe rides fee” to its UberX car service to cover the cost of insurance, background checks and more. The move came after criticism over an Uber-contracted driver who struck a 6-year-old girl with his car in San Francisco on New Year's Eve and another who was accused of sexual harassment by a journalist from the Daily Beast.


Lyft, on the other hand, announced last week that it was “testing up to 20 percent lower prices” across the country for spring.

“The pricing for a lot of these new mobility services has not really been figured out yet,” Gartner analyst Thilo Koslowski told NBC News. “I think there is a lot of experimentation going on.”

Services like Uber and Lyft connect independent contractors with cars with people who need rides. Despite resistance from taxicab companies and questions about who pays insurance fees, they have become increasingly popular over the last few years because hailing them is as easy as a couple of taps on your smartphone.

Overall, Koslowski said, price reductions could entice new customers into trying out these ride-sharing services. As for Uber, it should escape from its price increase unscathed, he said, because it has consistently marketed itself as a premium brand, especially with its more expensive UberBlack service, which features high-end sedans.

That leaves relative newcomers like Lyft to entice customers with lower prices — something that could backfire, Koslowski said, because the entire market is only around four years old.

“Any price reduction now might make it difficult for them in the future to actually raise their prices,” he said. “The race to the bottom isn’t good for any company in this space because the market is so immature.”