We’ve all heard the ads for huge sign-on bonuses, and lofty claims that Uber advertised, claiming drivers can make up to $25/hour, driving their own car and working their own hours.
There’s plenty of drivers quitting their full time jobs and relying on Uber to make ends meet. For many, it’s a unique and flexible opportunity to make money where they otherwise couldn’t. For others, it’s a risk gone south that didn’t quite pan out like they had expected.
I personally drive in the Midwest, and I’ve made anywhere from $5/hour during times of high driver supply and low demand, to $50+/hr during a snowstorm when barely any other drivers were on the road.
While I consider Uber a worthwhile side gig, I recently read an article that challenged the advertised $25 hourly rate, and questioned Uber’s claims that some drivers are pulling in nearly six figures driving for the platform alone.
Many drivers are also 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?
The first thing we need to know is how much Uber pays drivers for each ride they give.
Riders are charged based on a simple calculation: time plus distance. For each minute you’re in the car, you’ll get charged (X x minutes). Likewise, each mile you travel you’ll also get charged (X x miles). On top of that, there is also a Rider Fee, which is a set fee to cover things like driver background checks and other driver-related expenses Uber incurs when onboarding. Lastly, if driver supply is low and passenger requests are high, SURGE Pricing might be enabled, making your ride more expensive than normal.
The amount of the fares and fees listed above depend on 2 things:
- What type of Uber you request
- What city you request a ride in
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, causing the driver to actually earn less.
It’s 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. Many times drivers overlook these expenses, which comes back to bite them later on down the road.
These types of expenses, again, can widely vary 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 in the rideshare industry to budget around 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.
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.
Finally, we 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 likely 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.
Either way, these earnings are amazingly low. It’s amazing that so many people are still driving for the company. These rates really 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 – How do you make money”
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 with friends that drive in that area, I can confirm that that sounds pretty accurate. Some hours they earn less, but other hours they earn more. They’ve told me that they consistently get a few hours every week where earnings top $25-$35.
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 in the bargain (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, called a car, 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 alltogether, 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 multiple ways for drivers to increase their chances of getting tips. Try handing out water, candy, gum, or mints during rides. Costco sells these things in bulk, and you’d be surprised at what the impact of a little gesture can do.
Another way to increase your chances of getting a tip are to be friendly, professional, and not a jerk. Seriously.. I’ve ridden with some arrogant jerks, and I got a very bad impression. It’s always refreshing to get in the car with somebody 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 tons of different ways to refer people, whether it be encouraging friends to join or passing out referral cards at a bar. 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 2017?
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? Cast your vote below!
Questions? Comments? Connect with us and other drivers in the comments below. Ready… go!