By Bizna Brand Analyst

Uber drivers went on strike on Monday 20th February, Their grievances stem from the 25 per cent commission taken by the San Francisco-based firm which they term as “high and exploitative.” Uber allegedly continues to take the same commission even after they lowered the prices. When drivers factor in the cost of running the taxi, they end up not making as much profit as they would like.

Uber announced a 35 per cent drop in prices in July last year. This move forced other digital players such as Safaricom’s Little and Estonian taxi firm Taxify to also lower their fares

As of now, the drivers have decided they’ve had enough. They held a meeting Ngara during which they vowed to remain defiant until their demands were met. Apparently, the drivers will also hold a demonstration this Thursday.

Their aim is to get the help of parliament to enabling the passing of effective legislation concerning taxi drivers since their talks with Uber have proven ineffective.

Two weeks ago,  other city taxi drivers also petitioned parliament two weeks ago, asking lawmakers to set a price for various destinations that have to be observed by all players.

Wow. Things are definitely getting nasty. Drivers want to make money but Uber wants to make money too. Customers want cheap rides too. Something has to give, but what will it be?

If legislators manage to set standard prices for all destinations, Uber will definitely lose its lucrativeness. People like Uber because of its cost-effectiveness. They don’t necessarily like it because of the technology. Of course, there is comfort in just calling a cab with an app but that’s just a minor advantage. Regular cabs are everywhere. It isn’t hard to find them. If the drivers of those cabs didn’t inflate their prices, we wouldn’t bother with Uber.

So yes, Uber is good for customers but bad for drivers. It’s going to be hard for the company to solve this problem unless it employs it’s own drivers and gets its own cars. That is highly unlikely given the cost implications. As of now, the problem will remain up in the air.

Drivers already bear the cost of fuel, car depreciation and insurance — and they could leave for a competitor if Uber takes more from them. Already, Uber has a problem with driver churn. Research has shown that half of its drivers become inactive after only 12 months. Most Uber drivers are also doing it as a part-time job.

But why did Uber decide to take a higher commission yet its operational costs are very minimal? Since it does not own vehicles or employ drivers, the company saves a fortune in capital and workforce costs. There is a good reason for that. The company at large has had to endure numerous financial setbacks globally. In helping to create an innovative new market — the sharing economy — Uber spent a fortune training, recruiting and subsidizing drivers, giving away free rides so consumers would get hooked on the service, setting up a global system of local and regional offices as well as hiring lawyers to deal with lawsuits in some countries and regulators. Stability is being sought.

Last year the company made around 5.5 billion US dollars but had costs of up to 3 billion. Given these figures, it makes sense for Uber to want to make much more money. The only way to do this is to attract more customers by keeping itself as the cheapest ride-sharing service and still take a substantial commission from drivers.

The drivers don’t want that and so it remians a conundrum.