You can earn money driving for ride-share companies. But exactly how much can you make?
Ride-share companies are changing how people get around cities. Lyft, Uber, Gett, Haxi, Sidecar and others are competing intensely, some call it a “war,” with each other and with cab companies over riders and their money.
For freelancers, underemployed and unemployed people, ride-share driving represents a new source of part-time income.
It’s easy to get started.
“If you’re at least 21 years old, have a license, personal auto insurance, and a four-door car in good condition, you can sign up to be a driver” for Uber, the largest ride-sharing company, Business Insider says.
Here’s a look at earnings, costs, and some pros and cons of becoming a ride-share driver.
Things to consider
Ride-sharing is a new, and rapidly growing business. But can you make a full-time living? The jury is still out. Lots of drivers love the income — supplemental income, anyway — the flexibility and independence the work provides. Other drivers complain they are hardly covering their costs.
If you’re considering this line of work, keep in mind that:
- Change is constant. Before investing in a new car or other equipment, understand that pay, costs and working conditions are fluid. In some markets UberX has lowered prices repeatedly, writes an Uber investor. Some cities have banned or are regulating ride-sharing. The Seattle Times says that Uber, Lyft and Sidecar are “changing their business models in preparation for those regulations.”
- Drivers are self-employed. Drivers use a company’s software and, sometimes, its equipment, but they work for themselves. They use an app to connect with riders, to record trips driven, and to bill and get paid. They don’t carry cash or collect payments. Riders use mobile software to summon drivers and pay the company by credit card.
- Pay varies. Total fares may include a base fare, a charge for time and a charge per mile. Drivers get a percentage after the company gets a commission. Fares vary by city, by time of day and because some companies are dropping their fares to undercut competition.
- Tipping varies. Uber doesn’t allow drivers to accept tips, for example. It’s optional at Lyft and Sidecar, where customers tip electronically and drivers keep 100 percent of the tips.
- You can earn bonuses and incentives. Drivers may earn bonuses for the number of trips driven, new-driver sign-ups, and for referring passengers and other drivers to a company.
- The industry has its problems. Competition with taxi companies also is intense and highly political, the Sunlight Foundation says. Other issues include local regulations, the need to comply with the Americans with Disabilities Act, insurance coverage and airport policies, LXBN writes. Some unhappy Seattle area drivers have formed an association to advocate for themselves with the drive-share companies, The Seattle Times said.
- Driving can be risky. A Salt Lake City Uber driver told KUTV that a passenger held a gun on him. PandoDaily wrote about armed robbers targeting ride-share drivers in Los Angeles and elsewhere.
- Your insurance may not cover you. You’ll be required to have your own auto insurance. But it may not help if you get in an accident while operating your vehicle as a livery service for transporting paying passengers. Coverage offered by industry leaders Sidecar, UberX and Lyft varies. Generally, their coverage will apply if your insurance denies your claim or when you are providing a ride. But it may not cover you between rides. You need to understand the particulars. You may need to buy commercial insurance. The National Association of Insurance Commissioners lists questions drivers should ask of their insurers and their ride-share companies.
The dynamics of driver pay
Drivers report a wide variety of pay, and earnings vary by city and by driver. Some are surprised to learn the difference between gross pay (what you earn in total) and net pay (what’s left after your expenses). The Washington Post interviewed a disillusioned Uber driver:
“I thought 80 percent of the fares was a very good deal, but in reality Uber was making more money than I was,” said [Demek] Dagnachew, 49, who quit the job last month. “I had to pay taxes, gas, mileage and for car maintenance and repairs. I was spending time and making $3 per hour.”
A driver’s expenses can include: company commissions, any financing costs for your vehicle, gas, car insurance, health insurance, taxes, retirement savings, vehicle maintenance and depreciation.
For comparison, taxi drivers and chauffeurs earn $25,200, or $12.12 an hour, on average, according to 2013 Bureau of Labor Statistics numbers. The top 10 percent of taxi drivers averaged $36,850, or $17.72 an hour.
Pay at three companies
Here’s a quick look at driver pay at three of the more successful companies.
Uber serves the most markets and keeps adding more. It owns several operations, including limousine and taxi services, besides UberX, the fast-growing lower-cost service that lets drivers use their own smaller cars to transport riders. An Uber FAQ for drivers says:
It’s free to sign up. Once you start driving, a standard percentage of your fares (ranging from 5 to 20 percent) goes to getting you more riders, better tools, and legal advocacy to keep your business running. A $10-per-week service fee is automatically deducted to cover costs of the Uber phone and data plan. You keep the rest.
Lyft drivers are recognizable by the big, pink mustache on their vehicles. Lyft, like other ride-share companies, raises rates when and where demand is heaviest. It takes a 20 percent commission from drivers’ total fares, including from this peak-time (“prime time“) surcharge.
Drivers can earn a “power driver bonus” of 10 to 20 percent for working more hours each week and working at peak times.
Drivers also may impose a price multiplier, raising rates temporarily when they choose. It’s akin to peak-time pricing. Drivers pay the company a 20 percent commission on all payments and a 50-cent fee per payment transaction.
It’s the only service that asks you to input your destination and then calculates how much the ride will cost before the passenger is picked up. Its drop-off area feature lets the more casual drivers pre-set where they want to do drop-offs in case they just want to [give] a ride while on their commute to work or commute home.
Sidecar’s markets are listed at the bottom of this page.
Pay: Claims vs. reality
Company claims about driver pay don’t always pencil out. Financial writer Felix Salmon says Uber is a decent second job, but he raises an eyebrow at Uber’s claim that drivers in San Francisco make a median income of $74,000 a year. A driver earning $75,000 a year in San Francisco would have to work 58-hour workweeks, Salmon estimates.
“If you have a Monday-to-Friday day job, but it’s not enough to make ends meet, then you could probably earn an extra $400 per week, net of gas, by working 16 hours a week on Friday and Saturday nights,” Salmon says. “That’s $20,800 per year.”
Lyft claims its drivers make $35 an hour. But when I used Lyft’s earnings calculator (scroll down that page) to estimate earnings for driving 20 hours a week in a few random cities, trying Seattle, Los Angeles and Milwaukee, I was told: “You could make $400 a week!” (That’s $20 an hour.) In New York, finally, the calculator said I’d earn $700 a week ($35 an hour) driving 20 hours.
To fatten their paychecks, drivers find ways to increase earnings. In LA Weekly, a driver writes:
Once I joined Uber, there seemed to be no looking back. I scored $500 for joining, $500 or $250 for referring friends to the platform, $40 per hour guarantees on Friday and Saturday nights. My first night I made about $300, mainly due to a 7.5 surge price on a trip from West Hollywood to downtown L.A., which cost the passenger more than $100. Unethical? You betcha. Did I care? Not a bit!
Some drivers switch from company to company, or work for two or even three simultaneously, in order to boost incentive pay and get the most work possible from peak pricing surcharges. One told Fast Company:
“It’s only been like a month since Lyft started giving drivers big tips during peak hours, so I actually try to use both programs on the same nights. It sounds crazy, but I switch back and forth. Why not? Whatever makes me the most money. People think Uber gives the biggest tips because ‘surge pricing’ is such a famous idea, but now Lyft is throwing (it back) at them. So I’m taking advantage of it.”
Fortunately there are places to ask, and eavesdrop on, drivers to get a reality check. On Rideshare Dashboard, readers compare driving for Lyft, UberX and Sidecar. Other sites where drivers and readers blog and post comments include:
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