Subscription business models are very popular among investors, and that could be important as Lyft prepares for an initial public offering. “Wall Street loves them,” says Daniel Ives, the head of technology research for GBH Insights. He calls this approach a “golden business model” because it locks in repeat customers over time. “This is something that, as the company goes from private to public, would be looked on very favorably,” he says.

In recent years, digital startups have launched subscriptions in nearly every industry. You can get monthly razor deliveries and weekly dinner supplies. For $10 a month, cinephiles can watch a movie every day with MoviePass. You can listen to music with Spotify, get free delivery (and just about everything else) with Amazon Prime, and take fitness classes with ClassPass.

But ride-sharing subscription businesses have challenges that other industries, like software, do not. “Up until recently, most of the subscription-oriented businesses were for digital offerings—where variable costs were negligible,” Kellman Baxter says. “But with rides, there is a real cost for each ride.” Drivers must be paid enough to make it worth their while, regardless of the cost to riders. “The biggest concern is going to be coming up with pricing that doesn’t bankrupt them but is still compelling,” she says.

Since 2016, Lyft and Uber have experimented with membership passes—testing similar, simple programs. A rider pays an up-front fee and then gets reduced-cost rides for a month. (Prices and services vary according to the individual market.) But two years in, these passes remain experimental and hard to search out. Riders discover they are eligible through the app, and they can only try it for one month.

Sourced through Scoop.it from: www.wired.com