A few weeks back, Safaricom launched Little Cabs, a taxi hailing service in collaboration with Craft Silicon. Little Cabs , was meant to cut the dominance of Uber in the Kenyan market by offering itself as the cheaper market proposition for both drivers and riders. In terms of cost to the rider, Little Cabs charges no base fare but charges a minimum fare of Kshs. 270 and a cost of Kshs. 55 per kilometer and Kshs. 4 per minute. The company also asks for just 15% of driver earnings.
Uber has now come out guns blazing by making radical changes to its rider charges and incentives the company offers drivers. Uber previously charged a base fare of Kshs. 100 that was added to Kshs. 4 per minute spent on the ride, added to KES 60 Per kilometer of travel. The minimum fare cost was Kshs. 300 while it costs Kshs. 200 for cancellation. Below is a breakdown of the new charges:
| Older UberX | New UberX | |
| BASE | Kshs. 100 | Kshs. 100 |
| PER MINUTE | Kshs. 4 | Kshs. 3 |
| PER KILOMETER | Kshs. 60 | Kshs. 35 |
| CANCELLATION | Kshs. 200 | Kshs. 200 |
| MINIMUM | Kshs. 300 | Kshs. 200 |
Uber is hoping the price changes will attract more users to its platform and is denying that the new price changes were informed by the recent entry of new competitors in the market. “Uber is constantly looking to add value for its riders and provide unique opportunities for its drivers. As such, we do not make any decisions based on the competition”, said Nate Anderson, Uber’s GM for East Africa.
Owing to the reduced prices of rides, there were worries among driver partners that there earnings will be reduced. As such, Uber is providing its driver partners with guarantees during peak and off peak periods to allay fears of reduced earnings. These guarantees will be offered for every hour a driver remains online within the app. “We shall offer Kshs. 150 for the 79 peak hours and Kshs. 450 for the 69 off-peak hours”, said Nate Anderson. “We are hoping these new changes will see demand for rides from new and existing riders meaning more earnings for riders”, he added.
Its been rumored that these guarantees are meant to keep users more on the company’s platform. Being independent contractors, Uber drivers can sign up to different ride hailing platforms and offer their services based on the platform with demand. There were also whispers that demand for the service has in recent times plateaued within the City. Nate however denies this and says its a data driven decision that determines which times the drivers can complete the most rides and ultimately the most money. The team at Uber is wary of the repercussions of such a decision as a similar price reduction in South Africa led to driver protests. ” I recently spoke to over 1,500 drivers just this week to make them understand our decision. We made a similar move in Lagos and our driver partners saw an increase in demand and we hope to replicate the same here”, he added. The price reduction will be limited to Nairobi with Mombasa and Thika towns not included.
[…] Late last week, Uber Kenya announced it was slashing the prices of rides by upto 35%. The company has in recent times faced intense competition from new entrants such as Little Cabs which could have informed the decisions to cut prices. In addition, sources intimated that growth of the service in Nairobi had plateaued and the price slash was meant to ignite growth in the Kenyan market. […]
[…] July, Uber slashed the prices of rides in Nairobi by 35%. The move was seen as reactionary as the ride-hailing company was […]
[…] July, Uber slashed the prices of rides in Nairobi by 35%. The move was seen as reactionary as the ride-hailing company was […]
[…] Mid last year, Uber made the decision to slash its prices by 35% in Nairobi thanks to competition from Safaricom’s own Little Cabs. They slashed the per minute ride from Ksh 4 to Kshs 3, Kshs 60 per kilometre to Kshs 35 and reduced the minimum cab fare to Kshs 200 from Kshs 300 so as to be competitive with Little Cabs. […]
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[…] price wars sometime back had Uber and Little battling to see who could give the lowest rates to riders. And it was going […]
[…] now cheaper to ride with Little with the Basic option and the impact must have been felt. The price wars sometime back had Uber and Little battling to see who could give the lowest rates to riders. And it was going […]
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