Lyft is touting a metric that its main rival can’t crow about – tip money earned through the platform. Lyft famously offers an in-app tipping option for riders, while Uber does not; and since Lyft announced that drivers had collectively earned over $100 million in tips four years after the company started its ride-hailing business, it’s been providing updates on the earning potential represented by tips on a semi-regular basis. Today, it has a new update on total earnings, and it’s rolling out new features that could contribute even more to tip-based earning potential.
Just two-and-a-half months ago, Lyft announced that total tips had passed the $200 million milestone, so the additional $50 million accumulated between now and then has come at a faster rate than ever before. A few factors might be helping out here: First, Lyft has greatly improved its footprint in the U.S. in the beginning of 2017, expanding to well over 100 new cities. Second, Lyft is gaining ground on Uber in terms of market share as Uber reels from its cultural and leadership problems, at a rate that we haven’t seen before between the two rivals.
Lyft is now going to start showing new pre-set tip options in rides to hopefully help drivers earn more on longer rides, the company revealed today. On trips where the fare is above $25, riders will now get $2, $5 and $10 tipping options instead of $1, $2 and $5 choices (custom tip options also remain for all rides). Lyft says than in its initial small group testing, it’s already seeing tips rise on those rides where the cost is over $25 and people are seeing the new selections.
Just having tips at all is a competitive advantage on the supply side for Lyft, but the fact that it’s iterating on this to try to bump up earning potential means it’s aware and hopes to press that advantage. Uber has taken steps to try to shore up its driver-side product and address concerns of that client base, but Lyft’s focus on the upside here might help it earn more goodwill.