1/17/2014 | 1 MINUTE READ

Uber Cuts Rates for On-Demand Taxi Service

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Uber, the cell phone app that can be used to summon a taxi, has cut prices in 16 regions of the U.S. to help boost usage during the winter.

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Uber, the cell phone app that can be used to summon a taxi, has cut prices in 16 regions of the U.S. to help boost usage during the winter.

The rate cut ranges between 2% and 30%. It applies only to UberX, a service that uses amateur drivers using their own vehicles. The standard Uber service involves an independent professional driver and executive-type car. Drivers, who charge more during surge periods, normally pay Uber 20% of the fares they collect.

Cities will lower UberX prices are Atlanta, Baltimore, Charlotte, Chicago, Dallas, Denver, Indianapolis, Los Angeles, Minneapolis-St. Paul, Nashville, Orange Country (Calif.), Phoenix, Sacramento, Seattle and Tucson.

The five-year-old company operates in 26 countries in the Americas, Europe, Africa, the Middle East and Asia Pacific.

Uber CEO Travis Kalanick tells The Wall Street Journal that some price reductions might become permanent. The service told drivers in San Francisco it would accept a commission of 5% to pay for the promotion, according to the newspaper. But in other markets, drivers will receive less on the assumption that lower prices will result in more volume.

Kalanick describes Uber as an option that is cheaper than conventional taxis and "often" less expensive than mass transit. But the Journal says Uber's price cut may be a response to even lower rates from new competitors. One of them is Sidecar, which boasts that, unlike Uber, it tells customers exactly what their fare will be before they book it.

Another new service, Lyft, is being even more aggressive. It has been offering new customers unlimited free rides for two weeks if they agree to give their drivers feedback after every trip.