Lyft, the ridesharing app that connects available drivers with those in need of a ride, is taking a closer look at supply and demand.
The San Francisco-based startup announced Happy Hour, a feature that will offer Lyft passengers a 10% to 50% discount on standard ride costs during times when demand for drivers is low.
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Competitive ridesharing companies like Lyft, Uber, and Sidecar already take the opposite approach when things are busy, using surge pricing to elevate ride costs when demand is high. Lyft is the first ridesharing company to take this algorithmic supply and demand approach to time periods that may be slower for business, says John Zimmer, cofounder of Zimride which owns Lyft. It's a feature he believes will set Lyft apart.
"I think it's a major advantage," says Zimmer, who also said Lyft surge pricing never exceeds 200% the standard rate. "We want to make that both when you really need a ride and when it's slower, we have the most affordable option for you."

Lyft now offers Happy Hour, a pricing option that gives users a discount at times when demand is low.
Image: Lyft/App Store
The new feature launched Tuesday and will appear within the app at times when there is an abundance of drivers on the road. There won't be set time periods for Happy Hour, but Zimmer says that Lyft is busiest when people are traveling to and from work. At slower times, pricing will fluctuate based on supply and demand, and a Happy Hour button will appear within the app when it's available.
One negative to Happy Hour is that drivers will earn less money with cheaper fares. But Zimmer says that increasing ride totals should outweigh that issue.
"We're trying to maximize driver hourly earnings at the lowest cost," he explains.
The new feature is available now to all Lyft users.
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