Here’s a question – What if Uber’s ad on how much Uber drivers make is not entirely true? You and I have seen their advertising, the lofty claims of $25/hour, a flexible schedule, and a very generous sign on bonus.
Believe it or not, these ads work. Between 2010 and 2014, drivers making money with ridesharing apps rose by 69% in the USA. And in 2015 alone, this number spiked to 63% in just that single year. Look at this graph and take notice of the hockey stick growth in the dark blue line.
Because of these lofty ads, many drivers have quit their full time jobs and turned to Uber to make ends meet.
While being an Uber driver can be great, it does have risks. I personally drive in the Midwest, and I’ve made anywhere from $5/hour during times of high driver supply and passenger demand, to $50+/hour during a glacial snowstorm when almost all other drivers were hibernating like bears in their beds.
Based on this experience I used to think that Uber was a worthwhile side gig, and would often recommend it to others. But after reading this article, I now question Uber’s $25 per hour claims of drivers pulling in six figures a year, so I decided to do some personal digging.
Related: How Much Do Lyft Drivers Make?
Today, many drivers are crying foul, as the industry has seen record amounts of rideshare drivers quitting in droves, with nearly half of all drivers quitting after just one year.
More often than not, the earnings these drivers pull in fall well below their expectations, and there seems to be a bit of confusion as to how much Uber drivers get paid. Well, today I’m going to shed some light on the topic.
How Much Do Uber Drivers Get Paid?
Interestingly enough, I found that to truly figure out about how much Uber drivers get paid, it’s important to take into account two main points that often times get overlooked by most drivers:
- How much does the Uber ride cost?
- How much are Uber driver expenses?
The different factors that affect these numbers widely vary by city, but the general idea stays the same no matter where you drive. Let’s dig a bit deeper.
1. How much does an Uber ride cost?
Before we go any further we need to know how much Uber pays drivers for each ride they give.
Riders get charged via a simple formula:
Fare = Time + Distance
For every minute a passenger is in the Uber, they get charged (X x minutes). On top of that, every mile you travel also gets charged (X x miles).
Okay I told a small lie there. The total fare has a few more variables. They are:
- Base Fare
- Rider Fee / Booking Fee
- Surge Pricing
The Base Fare is fixed per trip. The Rider Fee or Booking Fee is also fixed and is set to cover things like driver background checks and other driver related expenses Uber incurs on booking.
These fees vary from city to city and also on what Uber the passenger requests.
Finally, if driver supply is low and passenger requests are high, SURGE Pricing might be enabled, to encourage more drivers to come to the road, costing the riders more. This is a multiplier and its value depends on the gap between driver supply and passenger demand. The wider the gap, the higher the multiplier.
So how riders get charged is based on a formula that has two parts. First we work out the subtotal.
SubTotal = Base Fare + Time + Distance
Then we apply the surge pricing (if any. If passenger demand and rider supply are balanced then this number is just 1.0) to the subtotal, then add the booking fee to get the fare the passenger pays.
Passenger Fare = (Subtotal x Surge Pricing) + Booking Fee
However this is not the payout the Uber Driver gets. Let’s illustrate with an example.
For this scenario, we’ll be using the example of a rider in Chicago traveling via UberX from The Sears Tower to the Navy Pier. The ride is 2.3 miles, and takes approximately 15 minutes. In Chicago, the base fare is $1.70, the cost per minute is $0.20 and the cost per mile is $0.90, in addition to a booking fee of $1.20.
Passenger fare: 1.70 + (0.20 x 15) + (0.90 x 2.3) + 1.20 = approx $8. (However, Uber’s Fare Estimator estimates this being between $12-14)
Let’s take an optimistic outlook and say the final passenger fare will be $14.
Not bad, right?
Well, the driver doesn’t actually get to keep all that money. Uber takes a 20% cut of the final fare.
It’s also worth pointing out that even if the rider is on a new user promotional credit, the driver still gets paid like normal.
$14 – 1.20 Booking Fee – ($12.8 x 0.80) = $10.24
So for the 15 minute ride, the driver would only earn $10.24. That’s not net, that’s their total payout for the ride before expenses, which brings us to our next point.
2. How much are Uber driver expenses?
After a driver has given an Uber ride, they must calculate the hidden cost of the ride. Often drivers overlook these expenses, which then comes back to bite them later down the road.
These expenses include:
- Insurance: This includes personal insurance and a rideshare or commercial insurance policy.
- Car/lease payments: amounts a driver pays to drive their vehicle. Drivers either own their own vehicles or lease one from Uber or a third-party provider.
- Tolls, license, permit fees: drivers pay for all of these fees. Passengers pay an added surcharge when drivers must incur toll fees.
- Gas: since drivers are considered independent contractors, they must pay for their own gas, and are not reimbursed
- Vehicle maintenance: drivers are responsible for their own vehicle maintenance and upkeep. They will be reimbursed if a rider damages their vehicle, however.
These types of expenses, again, can vary widely on a bunch of different factors, including what type of car you drive, what city you drive in, age, driving record, etc..
Given that fact, we’ll summarize these expenses and speak in broad generalities.
It’s a general rule of thumb for the rideshare industry to budget roughly 20% of the total ride fare amount for ride-related expenses.
In our example, that would mean: $10.24 x 0.8 = $8.19
At that rate – hypothetically speaking, after factoring in pickup, dropoff, and dead time – the UberX driver could estimate to make somewhere in the neighborhood of $15-20/hour if they were to get 2 similar rides each hour they drove.
Bottom line: Uber drivers have a lot of expenses, that cut into their earnings, and drastically affect how much they pocket when it’s all said and done.
How Much Do Uber Drivers Really Make?
**DISCLOSURE** – The numbers and figures listed in this article are meant to give a general representation of what some Uber drivers in the industry are currently making. I am by no means claiming that you will or will not make these amounts. What you earn depends on many factors out of my control, and I cannot be held accountable for the final number you pull in.
Now that we’ve dug into how the process works and looked at an example, let’s dive into some hard data.
To get a better understanding of exactly how much Uber drivers are currently making, we’ve compiled a list of figures from a variety of different sources.
SherpaShare is a technology company dedicated to making independent workers thrive. Their Smart Driver tools help Ridesharer drivers spot lucrative routes as well as a host of bookkeeping tools catered to the Ridesharer workers. Because of their platform and community they have a unique insight into this marketplace independent from Uber and Lyft.
Through them we finally have some believable driver-generated data on how much Uber and Lyft drivers are making around the country. And the overarching picture is grim – very grim. After taking into account vehicle and driving expenses, many entry-level Uber and Lyft drivers are not even breaking minimum wage. Ouch.
This is according to SherpaShare, a financial analytics site that allows drivers who work for on-demand companies to track their earnings. The company aggregated a bunch of data from drivers on the front lines, and came to the following averages in this chart.
It appears that in the vast majority of the country, not many drivers are making more than $11 an hour. For every city other than New York, earnings range from about $8.80 – $11 an hour.
It’s important to note that the earnings figures in this chart are the gross earnings, meaning before Uber’s and Lyft’s commissions are taken out.
Below, I show the same numbers, but minus the commissions to give you the earnings drivers actually take home.
Uber and Lyft Hourly Net Income – AFTER Expenses
|Salt Lake City||$10.54||$8.97|
Another source to look at when figuring out average Uber driver salaries is Glassdoor. This website gives an in-depth look into companies from real insiders within the company.
Glassdoor’s Uber page estimates driver earnings at around $14-15 per hour nationwide for UberX, and other entry-level Uber driver positions.
Granted, this is only based on a handful of reported driver earnings, but falls in line with other reported hourly amounts in the industry.
Screenshot of Uber driver hourly salaries on Glassdoor.com
Either way, these earnings are amazingly low. It’s astounding that so many people are still driving for the company. These rates are below minimum wage, especially after you factor in car costs and other driving-related expenses. It wouldn’t surprise me if a lot of drivers are ultimately losing money per hour rather than making it.
On the contrary, in Baltimore, Lyft drivers appear to be making just $7.59 per hour. Minimum wage in Baltimore is $7.25. So technically they’re making $0.34 more than minimum wage.
However, they’re not making more than minimum wage at all. It’s a pretty good bet they spend more than $0.34 in gasoline per hour. They also have wear and tear and depreciation on their cars that will eat substantially into their 7.59 hourly earnings. In fact, at these rates, I would bet they’re not making any money at all, they are probably losing money every hour they drive.
After taking a look at the Glassdoor page, we found a unique trend. To offset the low rates, it appears that some enterprising drivers are flocking to the platforms with the sole intention of claiming the huge signup bonuses Uber is offering new drivers. After all, it makes sense since Uber is giving away massive sign-on bonuses worth hundreds of dollars in an effort to compete with Lyft, which is giving also away bonuses worth up to $1,000.
My thoughts on “How to make money with Uber”
A lot of us had suspected these low figures, but this is the first time we’ve had objective third-party confirmation. It really makes you wonder why so many people are still driving for these companies.
At these rates, New York City is the only market in the country where UberX drivers actually stand a chance at making a decent income. Uber drivers in New York earn approximately $20.54 an hour. As a driver myself, I can confirm that this sounds pretty accurate. I was even informed that some drivers consistently get a few hours every week and earn roughly $25-$35 per week.
But when you sit down and think about it – how does it really make sense to work for a company that pays less than minimum wage but demands you bring a $20,000 – $30,000 piece of equipment to the job? And at that same time, the company requires you to put your own personal assets at risk (because there is no legal way to be insured for this type of work). The company pays no benefits at all, and will not be there for you if for any unforeseen reason you acquire some kind of disability and are no longer able to work. You’re a contractor, and if you get hurt or wreck your car doing something unrelated to Uber, you’re on your own.
Aren’t we all better off working at McDonald’s for minimum wage? At least McDonald’s doesn’t require us to bring some really expensive equipment to the job. Nor do they require us to put our own personal assets at risk in order to do the job.
I don’t think drivers, in accepting these extremely low wages, are factoring in the value of that really expensive piece of equipment that they’re bringing to the job! And all Uber and Lyft can do to show their gratitude is to barely pay minimum wage? They still demand 20% of the drivers’ earnings. Airbnb only takes 3% in fees. That sounds a lot more reasonable when you consider Uber and Lyft drivers are providing all the equipment needed for the job and taking on enormous personal risk.
In fact, drivers have provided more than $4 BILLION worth of cars to Uber. Uber essentially has a $4 billion dollar fleet on the road and they haven’t spend a single dime on a car! That’s the value drivers are bringing to the job – and it not only deserves, but demands better compensation.
The Answer – Be Smart. Be Creative.
Uber gets a bad rap for hiring contractors. While many drivers echo the sentiment above, typically in a negative way, they’re not wrong. But they’re also not entirely right either.
Uber has given hundreds of thousands, if not millions, of normal people a way to earn money on their own terms. Driving for Uber allows people to work their 9-5 and earn extra money on the side. If they want to ditch the office job altogether, that option is there as well.
But what if drivers want to truly get ahead?
Like anything in life, if you want to get ahead, you have to think outside the box. There are tons of ways Uber drivers can get ahead and add a significant boost in their income.
A few ways for Uber drivers to increase their earnings:
Tips are one of the easiest and most lucrative ways for existing Uber drivers to increase their income. There are many ways for an enterprising driver to increase their odds of getting tips:
- Hand out freebies – You’d be surprised at how many passengers appreciate some water, candy, gum or mints during rides. These can be bought in bulk, and a little gesture can go a long way.
- Be friendly and professional – This is just common sense, but there is a body of research that backs up likeability as an effective tool in persuasion. (Link to this?)
- Don’t be a jerk – Connected to the above point and again common sense. But I’ve ridden with some arrogant jerks in the past and gotten a very bad impression. It’s always a breath of fresh air to get in the car with someone body who genuinely wants me to be there.
The Uber referral program is another incredibly lucrative, underused way to earn more money as an Uber driver. As a way of countering Lyft’s huge rider and driver bonuses, Uber is practically giving away cash right now, offering existing drivers the chance to earn $5 for each passenger they refer to the app, and hundreds of dollars in cash for each new driver they refer.
There are several different ways to refer people, such as:
- Encouraging friends to join
- Passing out referral cards in social gatherings such as at a bar or at meetups
- Be the “Go To Guy” for signing up Uber drivers in your network. Check out the story of Joseph Ziyaee who made $90,000 in 6 months purely from referral bonuses. We’re not suggesting you can make as much as he did, but there are some valuable lessons you could use to partially increase your income.
Ask your local Uber support team what the current bonuses are in your city to get started.
Any way you look at it, it’s easy money that’s ripe for the picking.
These are just a few examples that come to mind, but there are tons more that I haven’t thought of.
At the end of the day, when you sign up to drive for Uber, you sign up to be your own boss. You run your own business, think like it. Once you adopt that mentality, things will start falling into place.
Poll – How much do you make driving in 2018?
Now it’s your turn. We’ve outlined what we’ve found, now we want to hear from you.
How much money do you make per hour driving for Uber? We asked, and drivers answered.
Here’s the results from our latest driver polls about Uber driver income:
Questions? Comments? Connect with us and other drivers in the comments below. Ready… go!