Being a commuter in Lagos, Nigeria sure must feel good right about now. There is an ongoing price war by the on-demand ridesharing apps operating in that city. The war began with Taxify, a relatively new entrant into the market and it seems it is a play hell bent on disrupting the market.
Taxify fired the first shot by announcing a price reduction for Lagos riders. Before its fare were priced as ₦350, ₦81 per KM and ₦8 per minute. Taxify has dropped its prices to ₦200, ₦55 per KM and ₦5.5 per minute.
With the new fare, a commuter in Lagos is likely to pay on average ₦950 when using Taxify, while using the competitor they could pay an average of ₦1,568. Given the base, fare has been per ₦400 KM and ₦9 per minute.
The Taxify driver’s commission remains at 15%, which much lower than what competitors offer at 25%. Taxify plans to give regular bonuses to its drivers to make up for this difference in commissions.
“While lowering the prices, we’ll be compensating our drivers with bonuses, to compensate the difference. Our focus is to provide drivers with better revenue per ride and keeping them happy with earnings and support we provide, which leads to ultimately better services for clients,” said Taxify.
Taxify has been operational in Lagos since November 2016. The company launched with a promise to bring down the cost of rides around the city, in addition to providing clean and comfortable taxis manned by efficient and friendly drivers.
Uber responds to Taxify price cuts by reducing its fares
No doubt, the move by Taxify to reduce its prices has disrupted the market. Uber in a defensive move has also announced a price cut for rides in Lagos. Uber, in what is widely seen as a response to the price cut by Taxify, has announced a 40% price cut effective May 4, 2017.
“Decreasing the fares should get more people requesting more rides with Uber, which leads to drivers spending more time with paying riders and standing a chance to earn the same or more,” Uber said in a statement.
The major difference between the price cut by Uber from that of Taxify is that the former has drivers who have become notorious for going on strikes; sometimes even at the smallest provocations. This price cut move by Uber, may not go down well with some of the drivers. To prevent a scenario where drivers go on strike, Uber has placed a “temporary earning guarantees” to ensure their drivers don’t go on strike.
