Are you thinking about venturing out into the gig economy as an Uber driver? There are currently more than 900,000 Uber drivers in the United States, making money from ridesharing fees. Uber offers you an easy way to make money if you have a car, and the flexibility of the job means that you can work whenever you feel like it, without having to answer to a boss.
If you like the thought of earning cash from driving around town a few days or nights a week, then this article is for you. You might find yourself wondering how much money you can make as a driver for Uber, and we decided to give you the answer.
What Does an Uber Ride Cost?
As with any business, you need to understand your overheads and the operating costs when becoming an Uber driver. Every time you go out in your car to pick up a passenger, it cost you money in gas and wear-and-tear on your vehicle.
Beyond these expenses, you also need to have an understanding of how Uber pays its drivers. Uber charges your passengers a fare based on the time and distance to the chosen location. Therefore, for every minute that the passenger spends in your car, the program charges them time. The app also charges the passenger for the distance they travel on the ride as well.
There are also other factors determining the cost of the ride;
- Booking Fee
- Base Fare.
- Surge Pricing.
Both the base fare and the booking fee are set costs per trip and helps Uber cover costs like background checks on drivers and other fees Uber incurs through running its booking model. These fees will vary, depending on the city, and the passenger’s requests.
On days where driver supply is low, and rider demand is high, Uber initiates “surge pricing,” charging passengers up to 400% more for the same trip. The surge pricing model helps to attract more drivers to the area, increasing driver supply for passengers.
The rate of surge pricing depends on the gap in demand and supply. The more significant the gap, the higher the multiplier.
However, Uber drivers don’t get to keep the entire fee, as they have to share it with Uber for providing the platform. In some cases, the driver’s expectations may not be in line with what the company pays the driver.
Let’s use an example of a passenger hailing a ride in Chicago. The passenger requests an UberX vehicle, picking them up at the Sears Towers, and then dropping the passenger off at the Navy Pier. For our example, we calculate the distance at 2.3-miles and the ride time at 15-minutes.
For Chicago passengers, the base fare works out to $1.70. Cost per minute works out to $0.20, and the distance cost works out to $0.90 per mile, with a $1.20 booking fee. Therefore, we can estimate that the total cost of the fare is approximately $8.
However, if you check the Uber Fare Estimator, it values the total cost of the fare at $14, which is over 50% higher than the real cost. Uber takes 20% of the fare, leaving the driver with 80%, sounds like a good deal, right?
Using our example of the Chicago fare of $14, the driver only earns $10.24 for the ride, with Uber banking the rest of the cash. It’s important to note that this is the gross profit of offering the ride, and you’ll need to take into account the costs of running and maintaining your vehicle in the calculation as well.
Read: The Gig Economy Explained: Why the Jobs Market is About to Change Forever
What Are Uber Drivers Expenses?
While the above calculations can help you estimate your fares, you also need to take into account the costs of running your car. Gasoline, oil, servicing, tires, and brake pads are just a few examples of hidden operating costs you need to add to your calculations to find out your net profit from each ride you give.
Uber doesn’t reimburse you for gas, nor does it refund you for tolls you pay on the passenger’s route. Therefore, you need to account for all of these costs yourself, and let’s not forget about the insurance premiums on your car as well.
These contributing factors to your operating overhead also vary widely, depending on what kind of car you drive and where you live in the United States. As a result, it’s challenging to estimate the exact costs involved, and most Uber drivers estimate that these expenses account for up to 20% of the gross fare you receive.
So, for our example, that works out to $10.24 x (0.8) = $8.19 after we deduct the running costs.
After working out all of these calculations, we find that the average Uber driver earns between $15 to $20 per hour if things remain constant, and they continually pick up fares throughout the hour. By now, you should have a thorough understanding of the costs involved with driving for Uber.
The costs eat into your earnings, dramatically affecting the amount of money you take home at the end of the working day.
DISCLAIMER: The amounts noted in this section provide a general guideline as to what Uber drivers can expect to earn on the job. However, your results could vary widely, depending on the time and effort you put into the platform.
Recent research shows that Uber drivers are untruthful with reporting their earnings, or they are making less than they think. The survey asked Uber drivers a series of easy-to-answer questions about how much they earn.
Surprisingly, the driver’s answer to the survey shows that the driver’s income reports were over 35% higher than the screenshots they sent into the study. The survey consisted of responses from more than 2,600-Uber drivers,
The screenshots of the driver earnings accounted for over $81,000 in total income from over 700 verified screenshots. These earnings represented nearly 2,500 hours in passenger trips. The results work out to a similar figure, with average earnings between $15 to $20 per hour.
Read: Best Side Hustles: Top Ideas for Making Cash on the Side
Service Level Offerings and Earnings
What you drive makes a difference in your paycheck. UberX drivers earn far less than Uber Black drivers, but they also have higher running costs for their vehicles. Servicing is more expensive, as is gasoline consumption and tires.
Here are the service levels offered by Uber.
- UberX
- UberXL
- UberSELECT
- UberBLACK
- UberSUV
- UberLUX
The same study that looked at UberX driver earnings decided to take an overview of the entire Uber ecosystem to get an accurate representation of driver earnings at each service level. The following are earnings after Uber subtracts its commission. However, the figures don’t take into account the drivers running costs and overheads.
- UberX (74% of all respondents)
- Reported average Income: $14.22
- Actual average Income: $13.70
- UberXL (16% of all respondents)
- Reported average Income: $15.48
- Actual average Income: $14.84
- UberSELECT (6.4% of all respondents)
- Reported average Income: $13.89
- Actual average Income: $14.85
- UberBLACK (0.8% of all respondents)
- Reported average Income: $16.47
- Actual average Income: $24.87
- UberSUV (1% of all respondents)
- Self-Reported Median Income: $10.93
- Actual average Income: $25.38
These findings provide us with results of the difference in earnings between service offerings, with Uber SUV drivers earning almost double what UberX drivers earn. However, the costs of running an SUV are nearly double that of a standard car. Therefore, we expect that after expenses, Uber SUV drivers aren’t making a whole lot more money than UberX drivers.
It’s important to note that all of these actual earnings are before tips. Uber started allowing passengers to tip drivers a few years ago, and it helped to boost driver earnings.
Where are the Best Locations to Drive for Uber in the United States?
Research shows that some states are far more profitable for Uber drivers. According to studies, here are the top states and worst states for Uber drivers to run their business.
The Best Cities for Uber Drivers
- New York City, NY
- Seattle, WA
- Honolulu, HI
- Long Island, NY
- Westchester County, NY
The Worst Cities for Uber Drivers
- San Antonio, TX
- Buffalo, NY
- Indianapolis, IN
- Tulsa, OK
- Tampa/St. Petersburg, FL
Comparing Uber driver earnings in 2019 to those in 2-018, we see that driver earnings continue to fall, mainly due to Uber cutting costs and rising competition in the industry of ridesharing from companies like Lyft.
In our research, we found that the only profitable state to operate in as an Uber driver is in New York. New York City is possibly the only U.S market where Uber drivers can make a full-time living from the app.
However, NYC recently imposed a ban on Uber drivers, due to the decline in the taxicab industry in the city, stating that Uber drivers are taking away jobs from cabbies that pay nearly a million dollars for a medallion.
However, a court recently ruled to freeze the ban for another year. One of the biggest supplemental incomes and Uber drivers can make is with in-ride advertising in the car. However, the New York courts recently ruled to ban advertising in Uber rides, further reducing driver’s income.
The court date for the ruling on the driver ban is yet to arrive, and we think that the city will eventually ban ridesharing, removing the most profitable market for Uber drivers in the U.S.
Making Money with the Uber Referral Program
One of the best ways to make money with Uber isn’t by driving for the company. Uber offers a referral program to its drivers, and it’s a lucrative way to boost your income as an Uber driver.
The company noticed the competition growing due to its referral programs, and decided to clone the Lyft model, providing drivers with commissions for referring new passengers and drivers. As a driver, you get a few bucks for referring a passenger, and several hundred dollars for referring a driver.
One Uber driver, Joseph Ziyaee, made more than $90,000 referring drivers to Uber over six months. Sure, $90,000 is a lot of money, and we’re not suggesting that you can make this kind of money with the referral program.
However, it should give you an indication of what’s possible if you get out there and start referring people to Uber. Call or email your regional Uber support team and ask them about the incentives for introducing new drivers and passengers to the app.
The Advantages of Being an Uber Driver
As an Uber driver, you don’t answer to a boss, and you get to work whenever you want. If you don’t feel like working today, then don’t turn on your app. You can even travel to other city’s and then turn on your app there if you need to make a few extra bucks while on vacation or visiting a friend.
However, if you’re a young hustler looking to earn extra cash as a side hustle, then driving for Uber is an excellent way to boost your income, and save enough money to start a real business.
The Final Thought
After analyzing the data from drivers and reports on driver earnings by Uber, we conclude that Uber can make you money. However, it’s not suitable for people that need to drive to make a full-time living. We think that the only market that it’s possible to make a full-time living from ridesharing is in NYC.
However, the costs of living in NYC are horrendous, and you’ll struggle to pay your bills at the end of the month. Driving for Uber is useful as a side hustle, but that’s about all its good for in your life. If you’re expecting to earn decent money, then you could be in for a rude awakening.
When you work for Uber, you sign up as a contractor, not an employee. Therefore, you don’t get any benefits from the company, such as a pension or 401(k). Stick to finding a full-time job to earn your money, driving for Uber full time is not worth the hassle.
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