When Uber announced its plan to radically slash prices for UberX, putting massive pressure on taxis and competitors, TechCrunch said "that's just part of the story." They were right, there is another side outlined in an email Uber sent to drivers in San Francisco (full email below).
TechCrunch said the other half of the story was "to make Uber more accessible to more people," and not a luxury brand. But in the email CEO Travis Kalanick emphasizes that the cuts are just a way to drum up business in slow months:
THE BOTTOM LINE
1. This is a temporary test to try to drive more rides during a traditionally slower period.
TechCrunch's post about UberX, which like competitors Sidecar and Lyft uses amateur drivers in their own cars, didn't offer a timeline about the aggressive pricing cuts, which made us wonder how long it could last. The email to drivers described it as a "test" that might run into March.
HOW LONG WILL THIS LAST? This is a test we are running during a traditionally slow period in January and possible into February and March. At the end of January we will communicate results to our partners. We expect to raise the fares back after the promotion. Depending on the results, we can best determine how long to do the promotion.
In separate emails to customers, Uber did not mention any particular month. Rather, the company said:
These prices will be in effect until further notice. They may not be permanent. The more you ride at these prices, the more likely we can keep them this low!
When we asked Uber about the timeline for the price cuts, the company told Valleywag: "The price cut has an undetermined length. In some cities it may be permanent." That's the same thing they told the Wall Street Journal, which quoted from the email to San Francisco drivers yesterday.
The fact that a multibillion company would couch a promotional sales tactic as a sea change that could push "the envelope of what we even think is possible" should only surprise people who think the sharing economy is about caring. Their job is to delight customers, even if it requires a little sleight of hand.
Kalanick said UberX now has the lowest prices of all ride-sharing apps. But John Zimmer, co-founder of Lyft, said the higher rates Uber charges in times of great demand make it the more expensive service. Lyft also began using surge pricing recently in some cities, but caps the amount it charges at three times the normal fare.
Sidecar CEO Sunil Paul said Uber is more expensive on average, and that his company gives riders the exact cost before booking. "We believe consumers deserve this kind of price transparency," he said.
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