Taxify is no stranger to price revisions. We have documented this over and over again ever since they stepped foot in Kampala. Whereas they likely received a positive reception from from both the riders and drivers, they haven’t employed a stable pricing structure as they keep on getting revised every now and then.
Its for the betterment of both riders and driver partners they say, but is it?
Just today, a notification from a one Julius from Taxify dropped in my inbox announcing a new pricing structure barely two weeks one from the same Julian announcing the previous price hike.
The price hike on the outside seemed to please Taxify’s driver partners that the hailing firm has long maintained it compensates for the subsidies they throw towards riders.
Todays price revision reverts the new structure announced on 29th January to one they earlier announced at the start of January on 4th of that month to be exact, touting a 10% reduction in fares.
The new fares are UGX 750 Per KM, UGX 110 Per Minute, a Base fare of UGX 1,000 and a minimum fare of UGX 4500.
What could be prompting these price revisions?
When Taxify launched, it was safe for them to stimulate demand and attract riders by undercutting the competition. They pulled a surprise by reducing the launch fares even further by 50% in November which they later on increased by a small margin at the start of December.
It is safe to justify the December price revisions as we ushered in festivities because Taxify still priced its services below the competition. A few weeks down the road into the new year and we were once again greeted to a new price structure albeit a hike though still below what the competition charged.
As we were winding up January, the same service increased the prices once again. The appreciation in prices was evident in both the base and per minute fare, from the previous UGX 1,000 and UGX 110 to UGX 1,100 and UGX 150 respectively.
February is here and as usual, there is anew price to it, which takes us back to what they initially introduced at the start of January, christening it a 10% reduction.
|Launch Pricing(UGX)||November Pricing (UGX)||December Pricing (UGX)||Early January Pricing (UGX)||Late January Pricing (UGX)||February Pricing (UGX)|
It could be that Taxify wants to maintain a price leadership strategy but is it sustainable? Judging by the evidence above, this seems unlikely.
Ask us why? Part of the rider fees go towards the driver partner and Taxify only takes a 15% cut of the total revenue generated from each completed trip. Where you might have recorded a price drop, it means Taxify had to compensate its driver partners to maintain the previous revenues they generated. This is a liability.
It should be noted that a company like taxify has to have enough in its coffers to sustain the subsidies enjoyed by both the riders and compensation it throws towards its driver partners. We assume this comes from their funders and by a fare estimate, it has to be bleeding money just like most upstarts in their early years. To what tune? That we don’t know for now since it is a privately held company.
We earlier anticipated the price hike to maybe, just maybe to have been caused by the hike in fuel prices but this new price reduction puts that hypothesis to shame as it can’t hold. Fuel prices are still high but Taxify has nonetheless reduced its prices. Riders can jubilate, drivers have nothing to worry about but Taxify has to hold still, to reconcile the earnings gap created in order to maintain their driver earnings.
And what is Taxify’s competition doing?
On the other hand, Taxify’s arch rival Uber, has maintained the same pricing model even after a 30% price reduction in response to the festivities in December. In the wake of recent fuel price hikes, Uber has still managed to maintain a stable pricing structure, something that came short of our expectations as their driver grievances haven’t waned significantly. Uber however maintains that it cushions its driver partners through partnerships it has with fuel stations like Total. These provide fuel discounts exclusively to Uber partners. Some go as far as having special voice and data packages from the likes of Africell. All these aimed at driver retention as the contentious issue of earnings fluctuations take shape on the other side, we doubt it instills confidence in Taxify’s drivers in abandonment of the compensation strategy should it seek returns on its investments.
Perhaps Taxify could borrow a leaf from its nemesis that started off very attractive to drivers, earnings were shooting through the roof but the service was rendered a marque product for the top brass, only to drop prices to attract demand from riders which they did but in the process they alienated their partners. The scars of the past have been hard to erase on Ubers side but efforts have been directed towards this cause are finally taking shape.
Still, we commend Taxify for pushing competition and at the end if the day, rider and drivers benefit the most.