In July, Uber slashed the prices of rides in Nairobi by 35%. The move was seen as reactionary as the ride-hailing company was increasingly under intense competition from new entrants such as Safaricom and Craft Silicon’s Little. 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.
In the new order, Uber slashed the charges for every minute spent on the ride from Kshs. 4 to Kshs. 3; charges per kilometre from Kshs. 60 to Kshs. 35 and dropped minimum charges from Kshs. 300 to Kshs. 200. Uber Kenya hoped the reduced prices would ignite demand from consumers giving drivers a chance to make more money off volumes of rides. The company also announced it was instituting guarantees for its drivers for every hour they spent on the Uber App. Through guarantees, Uber drivers will earn Kshs. 150 for the 79 peak hours and Kshs. 450 for the 69 off-peak hours.
The price reduction did not settle well with most drivers who immediately protested the decision and sought its reversal. The matter seemingly died down in the following weeks and not much has been heard of it. The firm has now released a statement saying that the price cut led to over 100% increase in new rides per week meaning more consumers joined the platform and existing ones continued to take rides as a result of the price cut. According to Nate Anderson, Uber’s General Manager in Kenya, the App has over 100,000 unique people opening our app every single month looking for a new ride. While Uber did not release concrete numbers on the same, the firm stated that drivers make 70% more trips daily which may be a positive performance indicator.
