A couple of weeks ago, to be precise on the last day of March, I got an email from “Uche from Taxify” informing me that they had “the best rates to move me around Lagos” in the month of April and went on to give me details including their new base fair, cost per kilometer, cost per minute etc. As if that was not enough, they added that there was a permanent 10% discount on top of the cheaper pricing! Crazy right? But that was not all. They also mentioned that they had made cuts to their driver charges as well, so that drivers could earn more even with the lower customer charges.
I wasn’t sure why I made a mental note of the email at the time, seeing as I had no plans of being in Lagos in that period, but it made sense that I did today, after I got a similar email from Uber announcing a 40% cut in their UberX rates. To illustrate their point, they state in their email that trips that usually would cost N1100 (such as a dash from Yaba to Ilupeju) now cost N800. As with the Taxify email, they also assured their drivers that the slash will not affect their earnings; in fact Uber states that they are confident that the drivers would earn as much or a bit more even, to the point where they are putting their money where their mouth is and have implemented an earnings guarantee for the drivers. Also Crazy…right?
All of this is happening at a period where, keeping a car on the road is as pricey as ever and obviously, the cost of fuel, has not changed (ignore my rhetorical question of a headline) and if anything, the prices of all the other things that a car needs to run (tyres, brake pads, engine oil etc) have gone up.
So how is it possible that rides are getting cheaper?
Well, in one word? Competition.
You see, as soon as two more companies (and in this case there are quite a lot, if you consider the six or so other cab hailing services, yellow cabs, Red cabs and all the other cab companies, danfo buses, ride-sharing apps like GoMyWay and all the other transportation options in Lagos) start competing for the same customers in the same location, the customers almost always wins as the two or more companies start to fight over themselves to offer cheaper and better quality services to retain their market.
Ultimately, these companies need customers to stay in business, so they start to innovate, and find more efficient, better and/or cheaper ways to serve their customers.
It’s the same reason why phone calls cost so little today, that not a lot of people I know undertake the ritual of checking their balance immediately a call ends—a habit that was common place when it cost N50 for any call between 1-60 seconds just a few years ago. It is the reason why I can now download a Gigabyte of data in 10-15 minutes today for cheaper too, than a couple of years ago, when a 70MB file meant staying up all night and internet was so expensive that I once thought a café that cost N100 per minute was cheap.
It’s also the reason why regulations like NCC’s floor price, which was a hot topic a few months ago do not make a lot of sense in the grand scheme of things.
As Lagos people start to enjoy their cheaper rides, here’s hoping there is no constant surge that erase the discounts, like happened last time with Uber.
— Rex (@rex41e) November 11, 2016
Uber need strong competitors in Lagos. Surge pricing is outrageous.
— Adewale Yusuf (@wexcely) December 19, 2016