Thinking of starting your own mobility business?

Talk to the world's best mobility service provider and get your business sorted!

Let's Talk

Lyft Business model: Disrupting the ride sharing industry

There are a greater number of people these days preferring the use of ride-sharing services such as Lyft. This is due to some factors such as higher overhead expenses involved in owning a car. The Ridesharing industry is growing at an incredible rate. If the reports from Statista are to be believed, the worldwide car-sharing market is expected to grow by more than 115% from 2021 to 2026. This already large market is expected to reach a $185 million figure by 2026.

So, it is no surprise to anyone that several entrepreneurs are keen to invest in this sector. Many entrepreneurs will be looking at the Lyft business model and developing ride-sharing apps such as that of Lyft. Let’s take a closer look at how the Lyft business model canvas works.

Lyft Business Timeline

Lyft was founded in 2012 by John Zimmer and Logan Green. This is a US-based on-demand transport service platform that has gradually evolved into a multimodal platform. The Lyft business model offers ride-hailing services that have a huge range of vehicles to choose from. Apart from that, Lyft also offers food delivery and car rental services. Lyft is another business equivalent of Uber and as a result, it is many times compared with Uber. It is the second largest ride-sharing service provider in operation in the U.S. and holds a 32% market share which is second only to Uber. At the moment Lyft’s business model works in more than 600 regions of the U.S. and 12 regions of Canada.

Lyft Business Model: How It Works & Generates Revenue - 2022
Lyft market share in U.S.

How does the Lyft business model work?

The Lyft business uses a peer-to-peer business model with a platform for connecting drivers with riders. But are you aware of how the Lyft business model works for drivers and riders? Let’s take a closer look at the Lyft business model and how Lyft works.

  • Lyft for riders

Lyft allows a user to get the desired ride at his doorstep within minutes by using just a few taps. In the beginning, the riders first have to download their app. This Lyft app is available on both Apple App Store and Google Play Store. After this, a rider will request a ride and the app will give you various ride alternatives to select from. You can get bikes and scooters, rentals, priority pickup, Lyft, wait and save, Lyft XL, Transit, Lyft Lux, and preferred mode. After receiving the request, Lyft will send a notification to the nearest drivers. After the ride is confirmed, the rider will have the opportunity to take a look at the driver’s details.

There is a map-based interface available with the app that allows the riders to track the booked vehicles and find out about the estimated time for their arrival. This app also shows live tracking right throughout the ride. There are several payment alternatives available for riders for making the payment such as Apple Pay, Google Pay, Venmo, PayPal, debit cards, credit cards, and prepaid cards. The riders may decide to tip the driver at the end of the ride although this is optional. Riders can rate the service on a scale of 1-5 with comments. The drivers may also rate their riders.

  • Lyft for drivers

Similar to the riders, Lyft also has a dedicated app for their drivers. There is an Express Drive program in operation for drivers that do not have their car. By using this program, these drivers can rent a car for driving with Lyft. However, these drivers have to pass the profile screening procedure before they can drive for Lyft. In case the driver passes the test, he can get started with Lyft. After the driver has downloaded the Lyft driver app and settled the profile, he will turn on driver mode for receiving a request.

Here the driver will get to see the pickup location of the rider and based on that, they may accept or decline the request. After a driver has completed a ride, the app will process the payment automatically. The Lyft business model allows drivers to get paid within an hour by using the Express Pay program. Apart from that Lyft will encourage drivers to register for the Lyft Direct debit card for having instant access to the payment they have just received. As the rider can rate a driver, vice versa is also possible with Lyft.

Lyft business revenue model

So, how does this ride-sharing giant make money? Well, the primary source of revenue for Lyft is from the riders. After the completion of each ride, the company gets payments from their riders which are called bookings. After cutting a 20% commission from the payment, Lyft will give back the remaining amount to the drivers. Out of this 20% fare, the city administration will collect a sales tax of close to 9%, and the Black Car Fund cuts a fee of 2.5%. Many times, Lyft uses surge pricing if the demand is high for a specific area. Drivers are encouraged to provide heat maps for high-demand areas and busy times. This allows the company to encash a greater number of rides and attract more revenue.

There is an Express Drive program started by Lyft, in addition to these operations. It connects drivers that need access to a car to third-party car rental services. The Lyft app will help the car rental transactions between drivers and these companies. The Lyft revenue model also uses a freshly started self-driving platform for providing last-mile commutes to their scooters and bikes. For maximizing its revenue, Lyft has collaborated with several organizations such as Waymo and Like Aptive for getting an autonomous driving experience for their drivers.

An insight into Lyft’s business model

There were several popular taxi apps in operation in the market before the arrival of Lyft. But Lyft was successful in its operations and was able to bring a lot of confidence to the people. Let’s look at some of the reasons for their success.

  • Budget-friendly and straightforward taxi hailing: When they were trying to get on top of this race, it was significant for Lyft to use a unique concept. This is the reason why they decided to change the conventional taxi-hailing system. The main objective of Lyft is to make passengers feel as if they are commuting with a friend and not strangers. An added attraction is that the rides are less expensive compared to the other apps.
  • Concentration is on issue-solving: Lyft has always been focused on resolving real-life situations for passengers. They have announced on their blog that they are going to be official medical suppliers in the state of Arizona and will follow the guidelines of the state. This makes the company the first ride-hailing platform that will carry medical beneficiaries. Lyft has been successful because it focuses on resolving issues and improving transportation possibilities by providing ground transportation solutions.
  • Unique services: Lyft business model always considered building a community as they began their on-demand app development for taxis. The marketing strategy used by Lyft was beyond thinking. They asked their drivers to set up a fluffy and big moustache on the front of their car. Riders were asked to sit in the car front for better communication. There are several alluring techniques, used by Lyft for their riders and drivers. These methods keep the drivers happy about their work.


This article would have given you a fair idea about how the Lyft business model works and how the company makes money. Lyft relies on a multimodal business model, commission revenue model, surge pricing model, and subscription revenue model for generating its revenue. In case you are looking to develop a Lyft-like transport app that will offer a range of services from car rentals to ride-sharing, you need to get in touch with pros. You can find some good ones with Jungleworks. These are skilled experts with a strategic mindset that will be useful for bringing your vision to reality.

Related Resources

No Comments »

Leave a comment

Your email address will not be published. Required fields are marked *

Jugnoo Post

Want to hear more about tech in mobility solutions?

Get tech related resources delivered to your inbox directly
Jugnoo Post

Having some queries?

Drop us a message and we will get get back to you shortly.

Jugnoo © 2024 Socomo Technologies Pvt Ltd. All Rights Reserved.