Ride-hail­ing sub­scrip­tions: Are they worth it?

Daily Local News (West Chester, PA) - - BUSINESS - By Cathy Bussewitz AP Busi­ness Writer

NEW YORK >> The start of a new year of­ten co­in­cides with a surge in monthly mem­ber­ships to gyms.

Ride-hail­ing ser­vices are hop­ing cus­tomers will think along the same lines about their trans­porta­tion needs. Uber and Lyft re­cently launched sub­scrip­tion plans promis­ing sav­ings for those trips to the gym, to work or around town.

The ride-hail­ing com­pa­nies stand to gain by in­creas­ing cus­tomer loy­alty in a com­pet­i­tive mar­ket and se­cur­ing more pre­dictable rev­enue at a time when both are head­ing into an ini­tial pub­lic of­fer­ing.

But you should fig­ure out if the num­bers add up be­fore com­mit­ting to one ride provider.

“I think both these things should come with the caveat, ‘buyer be­ware,’” said Keith Mill­house, a trans­porta­tion con­sul­tant and prin­ci­pal at Mill­house Strate­gies.

Mill­house called Uber’s sub­scrip­tion a “com­plete mys­tery,” and he said get­ting value out of Lyft’s plan was pos­si­ble, but com­pli­cated. Oth­ers were more op­ti­mistic.

“If (rid­ers) know they’re go­ing to be trav­el­ing enough or more than enough to take ad­van­tage of it, then by all means it’s an op­por­tu­nity for them to save money,” said Steven Polzin, pro­gram direc­tor for mo­bil­ity pol­icy re­search at the Cen­ter for Ur­ban Trans­porta­tion Re­search, Univer­sity of South Florida. “If you’re on the mar­gins, or you’re an in­fre­quent user, then you might not want to.”

What do you get with Lyft’s plan?

Lyft’s All-Ac­cess Plan, avail­able na­tion­wide, costs $299 and al­lows you to take 30 trips val­ued at up to $15 over 30 days. If a ride goes over $15, you pay the dif­fer­ence. Af­ter the first 30 trips, you get 5 per­cent off any

“If (rid­ers) know they’re go­ing to be trav­el­ing enough or more than enough to take ad­van­tage of it, then by all means it’s an op­por­tu­nity for them to save money. If you’re on the mar­gins, or you’re an in­fre­quent user, then you might not want to..” — Steven Polzin, pro­gram direc­tor for mo­bil­ity pol­icy re­search at the Cen­ter for Ur­ban Trans­porta­tion Re­search, Univer­sity of South Florida

Who can ben­e­fit from Lyft’s plan?

Rid­ers who take very fre­quent trips in the $10-$15 range hit the sweet spot. With­out the plan, 30 trips at $15 each would cost $450, so the plan could the­o­ret­i­cally save you about $150. At $10 each, you would break even. But if your trips of­ten cost less than $10, you may end up pay­ing more for those trips than you would have with­out the pass.

An­other con­sid­er­a­tion is how many days you need trans­porta­tion to work. Most full-time jobs in­clude more than 20 work days per month, which means more than 40 trips.

A 30-ride plan may ap­peal to those who oc­ca­sion­ally work from home be­cause the al­ter­na­tive — a monthly pub­lic trans­porta­tion pass — of­ten as­sumes five days of com­mut­ing per week so rid­ers may be pay­ing for trips they don’t take.

“As more and more peo­ple have started telecom­mut­ing, all of a sud­den those price points (for pub­lic tran­sit passes) aren’t nec­es­sar­ily as at­trac­tive,” Polzin said.

What do you get with Uber’s pass?

Uber rolled out a sub­scrip­tion pro­gram called “Ride Pass” in five U.S. cities: Los An­ge­les, Mi­ami, Den­ver, Austin and Or­lando. It costs $14.99 in all of those cities ex­cept Los An­ge­les, where it costs $24.99. Uber says the monthly fee gives rid­ers dis­counts up to 15 per­cent on all rides and pro­tec­tion from surge pric­ing, which is higher pric­ing trig­gered by peaks in de­mand dur­ing rush hour, spe­cial events or bad weather.

Who can ben­e­fit from Uber’s pass?

Uber has been hear­ing from rid­ers that they want more con­sis­tent prices. For ex­am­ple, some cus­tomers find that their ride to work is cheaper than their ride home, so hav­ing the pass can pro­tect rid­ers from an un­fore­seen spike, an Uber spokesman said.

The surge pro­tec­tion pric­ing could prove valu­able if you fre­quently take Uber rides dur­ing peak times or at pop­u­lar lo­ca­tions, say if you’re a bar­tender who works at a trendy night club that has a crush of de­mand for rides as partiers head home.

“With surge pro­tec­tion, that could be a good deal,” Polzin said. “If you knew you were trav­el­ing in places and times where there’s surge pric­ing, you could save real money real fast.”

What are the down­sides to sub­scrip­tions?

With Uber’s pass, you don’t get to see the price of your de­sired routes un­til you pay the fee, and some re­view­ers on Red­dit and Twit­ter said they got the pass and then paid what they con­sid­ered to be higher rates for rides.

Uber says that should not be hap­pen­ing, and if it is, rid­ers should write to cus­tomer sup­port. The com­pany is us­ing the pi­lot to col­lect feed­back from rid­ers be­fore rolling it out in more cities.

Other Uber rid­ers com­plained that the dis­counts amounted to pen­nies on short rides and $1 on a ride worth $60.

“Sav­ings are, on av­er­age, 15 per­cent to 20 per­cent, but can vary depend­ing on how busy it is,” said Michael Amodeo, spokesman for Uber, in an email. “For ex­am­ple, sav­ings will typ­i­cally be higher dur­ing com­mut­ing hours or nights and week­ends when more peo­ple are open­ing up (and us­ing) our app.”

For Lyft’s plan, there’s a spe­cific set of rid­ers who would ben­e­fit, but if rid­ers don’t use all of their 30 trips in 30 days, they lose them.

“Like most of these plat­forms, they are a big­ger ben­e­fit to com­pa­nies when con­sumers don’t fully take ad­van­tage of them,” said Mike Ram­sey, senior re­search direc­tor, au­to­mo­tive and smart mo­bil­ity, at Gart­ner. “It’s like a gym mem­ber­ship — the gym would be un­bear­able if ev­ery­one used it. None­the­less, some peo­ple take great ad­van­tage of very low cost sub­scrip­tions.”

“In many cases, how­ever, the eco­nomic ad­van­tage just doesn’t pen­cil out,” Ram­sey said.

RICHARD VO­GEL - AS­SO­CI­ATED PRESS FILE PHOTO

In this Jan. 12, 2016 file photo, a ride share car dis­plays Lyft and Uber stick­ers on its front wind­shield in down­town Los An­ge­les.

MARY ALTAFFER - THE AS­SO­CI­ATED PRESS FILE PHOTO

A woman uses a ride-hail­ing app while wait­ing for a ride out­side Grand Cen­tral Ter­mi­nal in New York. Ride-hail­ing ser­vices are hop­ing cus­tomers will think along the same lines about their trans­porta­tion needs. Uber and Lyft re­cently launched sub­scrip­tion plans promis­ing sav­ings for those trips to the gym, to work or around town.

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