Since Uber reduced its fares in Nairobi this year July, it has reportedly seen an increase in the number of people using its service amidst growing competition.
To help more people take advantage of the service, the firm is doing the same for Mombasa residents by slashing nearly 50 percent off its prices.
The firm has announced the its UberX passengers in Mombasa will be paying a new base rate of Ksh 50, Ksh 35 per kilometre, Ksh 3 per minute, Ksh 150 as minimum fare and Ksh 150 for cancellation, compared to the old base fare of Ksh 80, Ksh 50 per KM, Ksh 5 per minute, Ksh 250 as a minimum and a cancellation fee of Ksh 200.
In a statement, Kagure Wamunyu, Uber’s Operations Lead in Kenya, “By lowering prices you see a much higher demand for rides which means driver-partners can spend more of every hour moving people and less time waiting around for a paying ride.”
“This is exactly what happened when we reduced fares in Nairobi. Driver-partners started earning over 70% more in fares for every hour they work. This was led by a 100% increase in the number of trips requested from first time Uber users, showing that the reduced prices helped reach new riders,” she added.
Wamunyu is confident that the same win-win scenario will unfold when prices are reduced in Mombasa.
“We’re committed to making Uber one of the most affordable options to move around the city and our experience shows us we can make that happen while making Uber one of the best possible platforms for driver-partners to earn a living,” she added.
By reducing prices, it’s possible for Uber to unlock more business for driver-partners through increased demand for trips from riders. This might also help it unlock out its competitors, Little run by both Safaricom and Craft Silicon.
Struggling to out-compete its competitors, Uber is using other means apart from price. It has signed an affordable car loan deal with Sidian Bank to help its driver-partners buy now pay later, it has also partnered with Total so that Mombasa driver-partners when registering for a Total Fuel Card get a Ksh 3.50 discount off every litre of fuel. Little has already signed a similar fuel partnership with Shell, Total’s competitor and Mondo Ride might follow suit. With free WiFi, Little is likely to face of Uber bitterly. The price wars might end though.
Wamunyu said that lower prices are not always permanent and partner economics are very closely monitored. In the unlikely event that the lower prices don’t result in driver-partners making the same or more, Uber will rethink the fare reductions.