Happy holidays! We’re in the midst of a busy season for many people, which means some may be looking for a little more convenience in their day to day lives. Enter: delivery! It’s been a while since we’ve done an update on DoorDash, so today RSG contributor Dash Bridges shares how DoorDash’s pay structure has changed over the last few months and how that’s impacted earnings.
Hello from Dashville! It’s been a while since I’ve checked in, and there’s a lot to talk about.
Last spring, I reported on my Postmates and UberEATS road tests, comparing my earnings experience to the one with DoorDash. The clear winner was DoorDash and its (then) $6.00/delivery + 100% of tips payment structure. Since then, things took a turn…
(By the way, this a good spot remind everyone that I am a contributor to the team at The Rideshare Guy. I do not receive any considerations nor compensation from DoorDash except for my normal earnings as an independent contractor. My opinions are my own. OK, moving on…)
How Is Dashing a Year Later?
As I’ve said before, summer is the dashing off-season. Order volumes decrease and the influx of drivers (generally students) increases the driver pool, meaning there are fewer orders to go around.
Furthermore, and perhaps because of this labor glut, on June 12 DoorDash decreased their guaranteed delivery payment from $6.00 to $5.00. BOOOO! You can look at this pay drop a couple of different ways. At roughly 1.8 deliveries per hour, you’re losing $1.80/hour.
Or look at it another way, from June 12 through Labor Day, I completed 334 deliveries. Same orders. Same time commitment. Same miles on my car. Yet, I earned $334.00 (gross) less than what I would have made. The slow period and decreased pay led to the worst two months of my 26-month career. The numbers are brutal!
2015 DoorDashing vs. 2017 DoorDashing
2016 DoorDashing vs. 2017 DoorDashing
New DoorDash Pay Structure for Drivers
This summer’s $5.00 + 100% of tips structure didn’t last long. After an extended rollout, in late September DoorDash finally placed SF Bay Area drivers under an updated new pay model. The introductory email made some optimistic claims:
- More Dashers will earn more money. You will now get paid more for deliveries that are more complex. As a result, over time, most Dashers will earn more money.
- More clarity around total pay. You’ll now know how much money you’ll make for each delivery before you accept it.
- More than 80% of Dashers prefer the new model. After months of testing, hundreds of surveys, and dozens of interviews, our latest results show that more than 80% of Dashers prefer the new model.
The new pay structure is more complicated, at $1.00 + pay boost + 100% of tips. The key here is the pay boost, which DoorDash describes as, “our best estimate for the complexity of the order. In determining complexity, we consider many factors such as expected driving distance, traffic, parking, anticipated wait time at the store, size of order, and whether you have to place the order”.
Basically, they’re attempting to reward your degree of difficulty. And I can see why. I think DoorDash had a major problem with orders going unclaimed by drivers, leading to frustrated customers. On a lucrative Sunday night, who wants to fulfill a 10-mile, 3-item Taco Bell order when it’s likely a more lucrative order awaits after you decline the current order?
Dashers are savvy and low-ceiling orders are easy to spot. Heck, I’ve written articles ADVISING YOU to selectively decline orders! I’m certain these orders get declined, declined, declined, declined until the customer cancels and complains.
From the corporate side, it’s terrible for business. To combat this, in theory DD could make declining orders more painful by establishing stronger penalties against declining orders. They once had a three-declines-and-we-end-your-Dash rule, but quickly scrapped it. Instead, I think they tried to revise their formula to ENCOURAGE Dashers to accept those orders, which is a harder problem to solve, so I applaud that effort.
The new pay structure guarantees a $6.00 minimum payout per delivery, which is $1.00 more than the previous guaranteed minimum ($5.00 + 100% of a $0 tip). So under the new structure we have:
1) Higher minimum delivery earnings
2) Pay boosts for less-attractive orders and
3) No obvious disincentives or additional responsibilities.
That begs the question for us wary, side-eye-giving sharing economy participants…
What is the Catch?
Needless to say, suspicions ran high in the Facebook groups. After the recent pay drop and always-present mistrust of a large employer, it’s been an anxious time for dashers. For me, dashing is a (necessary but secondary) side job, but many of those folks count on every single penny earned from dashing to make ends meet. For many people, there are serious implications if they receive another pay cut after already losing $1/delivery in June.
Here’s a side-by-side comparison of the old and new incoming order notifications:
Under the old system, I only saw the meal value, which led me to guess the tip value. My inner monologue would go like this, “Let’s see…$31.87 meal cost….maybe $5 tip? So $5 + $5 = $10 for this delivery, plus extra if there’s a bonus. Well, maybe $10. Because I could get stiffed and make $5 or the customer could be super generous and throw in a $15 tip, earning me $20. I just…I just don’t know!”
In the new system, the app tells me the minimum I’m going to make on an order. It could be more, but through whatever algorithm they’re using, DD has decided to guarantee me at least $10.04.
And in fact, in mid-November, there was an ADDITIONAL update that shows me my exact earnings vs. guarantee. Check this out:
Prior to accepting the order at Tommy Thai, I was guaranteed $9.08. Once I completed my delivery, the app showed that my actual pay matched the guaranteed amount. As you can see in the post-Dash summary, which now itemizes all orders & payouts, that’s what I was paid as part of my November 13 Dash.
To be honest, I don’t know exactly what would compel pay to rise above what’s guaranteed. Perhaps if I waited at a restaurant for an extended period or the customer added something to their tip, I may earn more. But, in my few days using this update, my guaranteed and actual pay matched 95% of the time. When they differed, the amount was negligible.
What is Pay Boost and Where is it Going?
My biggest question for the new system is where is this vague ‘Pay Boost’ money going? I keep 100% of tips in both systems, so that’s a wash. The gist of it is, does the updated algorithm at least match the old $5.00 flat fee? If so, I should earn the same or more. If not, I’m going to lose money.
I have examples of Dashes where my delivery fees averaged both over and under $5.
In the first example, I earned $37.59 in fees from 7 deliveries. Obviously, under the old system, I would have earned $5.00 x 7 deliveries = $35.00. The new system worked to my advantage. In the 2nd example, My 11 deliveries earned me only $40.41. The old system would have paid me $5.00 x 11 deliveries = $55.00. So I lost out.
But looking again, I noticed in the first example that I benefitted on an evening where I averaged $18.02/hr ($73.89 / 4.1 hours). On the evening where I ‘lost’ delivery fees, I still made $21.55/hr ($113.36 / 5.26 hours). I think DoorDash subsidizes dashers on slow nights and decreases pay when we’re really busy and/or receiving unusually high tips.
Here’s an example of my theory. And yes, I think about this stuff when I dash:
The Dasher effort required on both orders is more or less the same, but the Dasher who won the order lottery earned $23 vs. the poor schmuck who made a pathetic $5.
Under my theory of the new system, the total payouts involve the same amount of money paid ($28), customer tips ($18) and fees ($10). DoorDash simply redistributes their pay boost to allow better earnings consistency.
Remember, Dashers didn’t get the choice of the Cheesecake Factory or KFC order. The order just popped up on the screen. DoorDash is trying to smooth out the earnings potential to make Dashers more likely to accept all orders. My theory is that they’re leveling the playing field. Not all the way, but a little, to move per order earnings towards a mean.
My first Dash within the new system was September 28. In that time, I’ve made 251 deliveries in 147.5 hours. Let’s see how I did….
Notice how my delivery fee per order is $5.61. That suggests that I’m earning more under this pay structure than I was under the old $5.00 system. Out of curiosity, I compared year over year over year, all the dates closest to 9/28 – 11/13.
As you can see, in 2016 the system guaranteed a $6 flat fee per order. In 2015 we briefly enjoyed a $6.50 guarantee per order. Those days are long gone.
Now, let’s go back to the first table and compare pay:
My conclusion is that I’m better off under the new system than I was during the summer. Unfortunately, it’s not by much and the summer was dreadful. Overall, my analysis suggests we’re making slightly more money under the new system. But I think the days of peak earnings for Dashers are gone.
Oh, I do want to add a non-financial benefit. I FEEL better when I’m dashing under the new system! In the past, after a delivery I only saw my earned fees, without tips.
The above photo is from the $6.00/delivery days. As I went through my dash, I could only see the flat delivery amount. After 5 hours and 10 deliveries, it’ll show I’ve made $60 plus tips. I don’t know the value of those tips, so I’d guess, “If I’m at 10 deliveries, that’s $60 for sure and then tips are usually a little less than the delivery fee so maybe I’ve made $50 in tips so I’d be at $110 if all goes well. But it could be $90 or could be $125 or more. No way to know until I end my Dash.”
Now, between orders I can look to the top right corner and see my running total. While I enjoy it as a novelty, I know that other Dashers drive thinking, “I HAVE to make $75 tonight to pay rent.” Once they hit that amount, they sign out. Or if it’s a particularly slow or busy night, it will encourage us to keep going or cut it short. Great feature!
Thanks for reading. Drive safely!
Do you drive for DoorDash and have you noticed your earnings increase or decrease under the new payment system? Let us know, or ask Dash questions about DoorDash or delivery in the comments!
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-Dash @ RSG