Grocery delivery service Instacart represents an opportunity to make extra money while enjoying flexible hours and tips. When compared to minimum wage, part-time jobs, Instacart pay is comparable or even higher while offering more freedom and autonomy (as well as weekly direct deposit of earnings).
As an Instacart driver, you make money by delivering groceries to your customer’s house. You visit stores such as Whole Foods, Costco and other participating local grocery stores, shop for the customer’s items and then deliver them to their door. The customer pays a delivery fee in exchange for this grocery shopping service, and you get to keep a portion of the fee.
But how much do Instacart drivers make? And what costs should you be aware of? We set out to answer these questions by looking at all the available data on both how much Instacart drivers are making and how much they can expect to spend on expenses related to their work.
Instacart Driver Average Earnings
Exact hourly pay for Instacart drivers is hard to predict. The company publishes no official data on contractor pay, though they do advertise that drivers can make up to $25 per hour during busy times.
In practice, however, drivers will rarely reach that $25 number. According to user-reported data on Glassdoor.com, full-service shoppers for Instacart are making between $7 and $20 per hour, with $11 per hour being the average. At present, there is no “hourly guarantee” like rideshare and other delivery services offer. This means that you should be prepared for a wide variation in hourly income when working for the service.
While the precise algorithm that Instacart use to calculate driver pay is unknown, we do know that drivers earn more for making deliveries when demand is high. During periods of high order demand, Instacart charges customers an extra “Busy Pricing” service fee. This helps ensure that the supply of drivers matches the number of open orders. As a driver, you can therefore maximize your earnings by accepting orders during times that tend to be busier, such as evenings and weekends.
The number one opportunity for increasing your driver earnings, however, is tips. Tips are what can push your hourly income way above the base rate that Instacart sets. To maximize your chances of receiving a tip, make sure to provide the best possible customer service. Follow customer instructions closely, deliver orders on time and be friendly. Paying attention to these details will go a long way toward boosting your tips.
Instacart Driver Expenses
Working as an Instacart shopper has a lot of benefits, including a flexible schedule, active job and the chance to earn tips. However, working for yourself also means that you’re responsible for additional expenses and considerations that you don’t have to worry about in a full-time job.
As an Instacart shopper, you are an independent contractor. This means that you have to cover all your own expenses and pay your own taxes. Because of this, the hourly pay you earn from Instacart will not be the final amount you clear after taxes. Let’s look at some common expenses you’ll have as an Instacart delivery driver:
- Gas — The price of gas varies greatly across the United States, averaging as low as $2.63 per gallon in Mississippi to as high as $3.72 per gallon in California, according to data from GasBuddy at the date of publication.
- Vehicle Insurance — The average annual cost of vehicle insurance is $907.38 per year according to a 2014 study by Quadrant Information Services. This number can vary widely, however, averaging as high as $2,500 per year in some states.
- Car Payment — As of 2017, the average car payment on a new vehicle was $479 per month. This can really cut into your earnings, though of course this amount can vary (or even be nothing if the car you’re using is paid off).
- Vehicle Maintenance — Need a new tire? Transmission fluid running low? Windshield wiper break? As an independent contractor, you’re responsible for covering these costs, just as you would if you were using your vehicle for regular driving. According to AAA, the average cost of repairs, maintenance and tires is $99 a month for a new car. You’ll likely need to drop a few hundred dollars all at once for a repair, so make sure to put aside some of what you make each week to cover that.
- Vehicle Registration and Fees — These vary from state to state, but are usually under $100. You’ll have to pay this fee as long as you own a car, but since you’re using your car for business, you should still consider it.
- Taxes — Taxes are an expense that many independent contractors overlook. This can make for a nasty surprise when tax time rolls around, as you’re responsible for paying the necessary state and federal income taxes on the money you make delivering for Instacart. The taxes on your Instacart income won’t be very high since most drivers are making around $11 per hour, but you still need to set aside some of the money you make each week to cover them. To learn more, check out our Complete Guide to Self-Employment Taxes in 2020.
While these expenses do add up, there is one consolation you should know about. As an independent contractor, you can write off certain business-related transportation expenses when you file your taxes.
In particular, you can write off miles you drive while making deliveries. For 2020, the rate is about $0.58 cents per mile driven for business purposes. The tax guide we mentioned above goes into more detail on deductions you can take.
Instacart: Know the True Income and Costs
We hope this article has helped you understand both what you can expect to make as an Instacart driver and the expenses you should be aware of. With earnings as they are, Instacart is best as a source of supplemental income in most markets, though of course your mileage will vary depending on the customers you serve and your personal income needs. To learn more about how to get started driving for Instacart, check out our How to Become an Instacart Driver guide.