Why Uber slashed its Prices by 35% in Nairobi


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.