A lot of people think rideshare driving is all about making money. Of course, making money is the goal, but what many drivers don’t realize is the costs involved in driving for rideshare companies as well. For starters, you’ve got gas and maintenance on your vehicle, extra insurance so you don’t lose your coverage, and more. RSG contributor Tyler Philbrook has outlined the various costs involved in being a rideshare driver. Keep in mind that each person’s costs will vary.
“I made $1,000 this week.”
“I had a $300 ride today.”
“I pay Uber to drive for them.”
No doubt you’ve heard all of these and many variations on each. The truth is, they don’t give you the whole picture, and they don’t help you decide if rideshare driving is for you, or if you’re doing it right.
Looking at the real numbers will help you figure out if it’s worth it in your situation to rideshare drive. Or, if you’re already driving, where you can make improvements to keep more of your money.
- Calculating your per-mile cost is invaluable in determining how much money you should aim to earn on a regular basis.
- Many expenses are variable, so revisit your expenses often to determine the correct amounts.
- Don’t use someone else’s numbers, each person will have different costs and income.
Calculate Your Per Mile Cost
The IRS gives you a per-mile tax rate, currently at 65.5 cents per mile.
Calculating your cost per mile is the best way to determine if you are profitable because it shows you how much you need to make just to break even. For instance, if your per-mile total cost is $0.75, you know not to accept any rides or deliveries that make you less than that.
The number one expense for most drivers is going to be gas. Even if you have a Tesla, you still have to pay for that electricity with money and time. But how do you figure out how much you’re spending per mile?
As long as you know your miles per gallon, you can figure out how much you’re paying per mile in gas. For instance, I get between 45 and 50 MPG (I love my Prius); let’s say it’s 45.
Gas in my area has gone down a lot lately, and with the help of Upside and places like Costco and Sam’s Club, I’m able to get gas for $2.70 per gallon currently. But I don’t expect that to stay, so let’s round up to $3.
This makes my per-mile cost $0.07.
Don’t use Upside yet? Check out our Upside review and watch our video on how to use Upside here: How Does Upside Work? Does it Actually Help Save Money On Gas?
Insurance is another large expense that you incur to drive. To calculate the per-mile cost, take your monthly premium and divide it by your average miles of driving. This may be hard to figure out if you’re just starting out, but a good rule of thumb for me is 100 miles driven for rideshare per day.
So, if I plan on driving for 3 days, I’m going to drive 300 miles. If I drive three times a week, in a month, I’ll drive 1,200 miles. Take your insurance premium and divide it by that.
Following this estimation, my per-mile cost for insurance is roughly $0.18. However, this is one that the more you drive the lower the expense is, alternatively the less you drive the higher the expense.
For instance, if you drive five days a week, at 200 miles per day then your per-mile cost is $0.05 (based on a $215 monthly premium).
Think your car insurance is too expensive, or has it been a while since you shopped around? Check out our rideshare insurance options for drivers.
If you don’t take the time to maintain your car, then there will be times you don’t have a car.
Getting regular oil changes when the time comes, getting new tires, tire rotations, and regular check-ups are not just something you should do, but something you need to do.
It can be hard to figure out your per-mile cost on these, but again a simple way to figure it out is to do an average of 100 miles per day driving and figure out how much you will pay for those for the year.
Expect to get your new tires once a year because of driving more than most people. An oil change once a month is typical if you’re driving full-time.
And regardless if you drive full or part-time, you should get your car checked at least every six months.
Once you have your annual estimate of costs, divide it by your estimated miles, and you’ll have a per-mile amount.
We’ll stick with the three days at 100 miles per day and put our yearly maintenance cost at $1,800, which would put our per-mile cost at $0.12.
Not sure how much you’re really making with Uber and Lyft? Check out our video on your earnings + expenses here: Are You REALLY Making Money Driving Uber Or Lyft? Find Out Your Real Costs When Driving
You should keep your car clean. Keep it as clean as you’d want it to be if you were a passenger in the car.
To do that, you need to clean your car at the end of every shift, whether that’s just using some cleaning supplies you bought that you keep in the car, getting it cleaned by someone, or going through a car wash.
Not sure what cleaning supplies you need? Take a look at the top car cleaning products according to drivers.
When I was driving full time, I went to the car wash next to my house on my way home every day. It cost me $20 a month, and I could go through as many times as I wanted. They also had vacuums and trash cans to ensure I didn’t miss anything.
On top of that, I also had some basic cleaning supplies in the car for emergencies, which probably cost another $20 for the year.
Let’s say it cost me $25 a month for cleaning, bringing my per-mile cost to $0.02.
Saving For Your Next Car
No matter how well you maintain your car, you will need a new one eventually. If you’re driving all the time, that means you’ll need a new one sooner than most people.
Most cars will make it to 300,000 miles if properly maintained, and I plan on keeping cars to around 200,000 miles. I’m also not content with waiting till I need the car to start saving for it, so I factor that into my per-mile basis so I know how much I need to make to cover this expense as well.
These are the best cars for rideshare drivers:
Again, saying we drive 1,200 miles a month and our current car is at 95,000 miles means I need a new one in 105,000 miles. Assuming an additional 800 miles per month in personal trips, that means we’ll need a new car in just over four years.
If we are to save $20,000 in those for years, driving 1,200 miles per month, our per-mile cost for a new car is $0.35.
And Don’t Forget About Taxes!
Finally, with all types of income, you have to pay taxes. For most rideshare drivers, the number of miles you put on your car (and are thereby able to deduct) will more than cover the amount you’ll pay in taxes.
Driving 1,200 miles a month will give you at least a $9,000 tax credit on miles alone.
However, putting money aside is the best idea if you make enough to where you need to pay more, and we hope you do.
I typically put aside at least 10% from rideshare driving into taxes, just in case I owe anything, and if anything is left after I do my taxes I consider it a “tax refund.”
Without knowing how much you make, it’s hard to say your per-mile cost, but I try to make a minimum of $1 per mile, and 10% of that is $0.10.
Total Per Mile Cost—Is It Worth It?
After adding all of these up, we come to $0.84 per mile it costs for me to drive rideshare.
A few things to keep in mind, most of these numbers only factored in the actual business driving, and I didn’t discount anything for personal driving, meaning numbers will be even lower.
Also, some costs go down the more you drive, so if you want to do more hours, or even do full time, your per-mile cost can go down.
As I said, I typically can get $1 per mile or better. Last week my average was $1.47 per mile, meaning that my pay after expenses was $0.63 per mile.
What’s important to note about these numbers is that they are estimates, and I think they are best used to tell if a ride or delivery is worth taking. For instance, if you get a delivery that’s $2 for a 7-mile ride, you know it isn’t worth it because it’s outside of your per-mile cost. If that same ride costs $7, you may consider taking it.
Takeaway for Drivers
Having an idea of the cost of running your business helps you make better choices in how you run your business and ultimately helps you make more money.
Remember that your expenses will change if you get a new vehicle, if your insurance premiums go up, if you have a high-maintenance item needed for your vehicle, if the cost of gas goes up, etc. It’s best to reevaluate your expenses and earnings regularly to make sure you’re doing everything you need in order to turn a profit.
What per mile earnings do you aim for?
-Tyler @ RSG