Lyft, the ride-hailing service, confirmed Wednesday it will be piloting a new subscription service for its users. The All-Access option gives riders $15 off 30 Lyft rides for $200 upfront. All rides under $15 are free and users will pay the difference on rides over $15. Theoretically, it’s a savings of $250 for frequent service users.
The subscription model is a bold and new idea for Lyft, but not a new idea in business. It has already been extremely successful for billion-dollar companies like Amazon and Costco, for example, and Americans can’t seem to get enough of it. GOBankingRates decided to take a closer look to determine why subscription-based pricing models are so popular and what it likely means for the future of Lyft.
Click to see 11 things you must know before driving for Uber or Lyft.
Membership Promotes Exclusivity
The feeling of exclusivity gives members the illusion that they’re getting a backstage pass to the action. In reality, there’s no secret club with these retailers. The retailers want your money; hiding or withholding products from a faction of customers doesn’t serve the retailer’s bottom line.
Further proof Americans crave exclusivity: Lyft’s All-Access plan is piloting on an invite-only basis and there’s already a waitlist, TechCrunch reported.
Membership Comes With Pressure
People want to justify the annual premium by getting the most bang for their membership buck. Financially-savvy consumers crunch the numbers to calculate when a membership will “pay for itself” to justify the fee.
Membership Equals Spending
Amazon’s 90 million Prime customers spend $1,300 per year on Amazon, nearly double the $700 spent for non-Prime members, as estimated by Consumer Intelligence Research Partners. Next month, Prime members with an annual membership will renew at a rate of $119 per year, and the student discounted rate will renew at a rate of $59 per year.
Costco’s $60 annual membership fee for its Gold Star Membership pales in comparison with what shoppers are dropping for every visit to the warehouse. The average Costco haul per shopper is $103.37, and shoppers visit on average every 28.4 days to fill up on food, pet and beauty items.
If the subscription model yields the same success for Lyft as it does for Amazon and Costco, the ride-hailing service titan might have captured lightning in a bottle.
Click to keep reading about 20 deals you can only get at Costco.