How Do Uber and Lyft Work And Why Should I Even Care?

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Chances are you’ve heard the term “ridesharing” floating around lately, as rivals Uber and Lyft work themselves into a froth trying to outdo each other. But depending on where you live and what your transportation needs are — maybe you own a car or taxis are readily available on-demand through local services — you could have no clue what these companies actually do. And you might not care, but if you don’t have a car and need to where a car can take you, you should know your options.

While services like Zipcar or FlightCar hook up regular drivers who need to hire a car to drive themselves somewhere to do whatever is that needs doing, Uber and Lyft both summon drivers to passengers in need of a ride. But which one do you need, and what’s the difference in prices?


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Founded in 2009 and available in 212 cities and 45 countries, Uber is a smartphone app that connects passengers to drivers with vehicles for hire. All hiring and payment goes through Uber and not the driver (except with uberT, see below). Drivers must have a valid license as well as the commercial licenses to drive professionally in whichever city they operate in.

Passengers choose which kind of car service they’d like to request on the app, then plug in their location and in some cases, destination addresses. The app then alerts the customer when a car has been confirmed, and shows the driver’s name and license plate number while also displaying the driver’s route and estimated time of arrival. Riders then tell the driver where to go if that info isn’t already in the system, and then a receipt is emailed to the customer after the trip has completed. Passengers and drivers rate each other, as an incentive to be both good customers and provide feedback on drivers.

Uber sets the fares for each service in each city based on its own formula calculated using either a per mile rate or a per minute rate, on top of a base fare of a few dollars. Passengers don’t need to tip, as the gratuity is included in the entire fare. When demand for a car is high — during inclement weather or rush hours — customers are alerted of “Surge Pricing,” which the company says is a way to incentivize more drivers to get on the streets to accommodate all those customers.

Passengers also have the option to split the fare with other riders they’re in the car with, by selecting that option in the app.

There are many kinds of Uber services, depending on which city you live in.

uberX: The cars aren’t as fancy as a traditional limo service — “The low cost Uber,” sample cars in NYC, for example, include Toyota Camry, Lincoln Town Car, Chrysler 300.
Who would use this: It works much like getting a cab, so in cities where you can’t always find a taxi on the street, this might be what you’d use to get home from a restaurant with up to three friends. I’ve known people who use uberX for moving stuff across town.

UberBLACK: “The original Uber,” this is the premium option and as such, costs more than uberX, akin to a limo or black car service that uses licensed chauffeurs of luxury cars.
Who would use this: Anyone heading somewhere fancy or who just wants a nicer car than uberX.

UberXL: If you’ve got a bigger group you’re traveling with, this is the “low-cost” option to get more people into one vehicle. It costs somewhere in between uberX and UberBlack.
Who would use this: There are dinner reservations in 10 minutes and you have seven people who refuse to walk.

UberSUV: The premium option for those with a big group, this charges the highest rates of all the various Ubers, with sample vehicles including Chevrolet Suburban, Cadillac Escalade and GMC Yukon XL.
Who would use this: When everyone needs to get to the opera, this is what they might want.

uberT: Hails taxis (and boro-taxis in NYC) to the app user’s location, but the customer handles the payment outside of the Uber app.
Who would use this: People who can’t find a taxi on the street but still want to use a taxi.

Confused? Just remember — the services with the lowercase “u”s are cheaper than the ones with the uppercase “U”s.


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Started in 2012, Uber’s biggest competitor is so far only available in the United States in 64 cities, including Washington D.C. Like Uber, it connects passengers to drivers using their own cars through an app that handles payment. Drivers do not need to have a commercial license to drive professionally, at least not according to the Lyft site, just a regular driver’s license for at least a year prior to driving and their own vehicle (newer than 2000 and in good working condition). Passengers and drivers rate each other, and if you give someone three or below stars, you won’t be matched up again.

Customers use the app to select what kind of ride they want and enter their pickup address, and are connected to a Lyft driver. The app displays a photo of the driver and the car’s license plate number and model. Cars arrive bearing a pink mustache (though new drivers won’t get their mustaches until they’ve completed 30 rides), making them hard to miss.

Lyft currently has two ways of charging fares — it collects donations, where riders see a suggested amount but can choose what to pay. Some example cities where donations are the way to pay: Austin, Ann Arbor, Madison, WI, Orlando.

Other cities have a set charge that’s calculated using time and distances, on top of a base fare. There’s also a minimum fare, with all rates and fares varying by city. Tip is included in the entire fare, but passengers have the choice to add an extra tip at the end. And just like with Surge Pricing in Uber, Prime Time pricing goes into effect when cars are in higher demand.
Example cities that have a set charge: Atlanta, Chicago, Denver, New York City.

The company claims it “tends to be a bit cheaper (and a whole lot more fun) than other transportation alternatives,” but checking fare rates for both Lyft and Uber in NYC show both have a base fare of $3 and a $0.40 per minute rate or $2.5 per mile charge.

Lyft: The original service, these cars fit up to four passengers. Licensed drivers with cars newer than 2000 model years (in good working condition, according to Lyft’s requirements) are connected to riders who have a place to go.
Who would use this: A person who doesn’t really care what kind of car shows up(these aren’t luxury vehicles), but just needs to get from point A to point B.

Lyft Line: So far available only in San Francisco and Los Angeles — passengers use the app to set a route, and a driver then picks up matched passengers along that route for a fixed price. The more riders, the cheaper it is.
Who would use this: If you’re really short on cash and can’t afford a cab on your own, but don’t have pals to split one, this might work. It all depends on if anyone else wants to go your way.

Lyft Plus: Bigger vehicles to accommodate up to six passengers, or suitcases, boxes and other large-ish things you might need to move. Slightly higher base fare, per mile and per minute rates, and higher minimum fare.
Who would use this: Anyone who’s got a bunch of buddies and a destination in mind, or someone who doesn’t want to rent a car/van/short-term car to get from one place to another with a bunch of stuff.

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