There are a lot of opinions out there about driving for Uber and Lyft, but I’ve never tried to convince anyone that they should or shouldn’t do this job. Driving for rideshare services isn’t for everyone, but one thing I do know is that there are hundreds of thousands of people doing it and thousands more signing up every month. And if you’re considering it or you’re already a driver, my job is to provide the best information possible and serve as a resource to help answer all of your questions.
A few years ago, I posted about the earnings potential of a driver in the Los Angeles/Orange County area, but a lot has changed since then. Although that article extensively broke down my earnings, I figured it was time to update it.
So during a recent week of driving, I decided to track all of my rides and analyze my total income and driving strategy. I’m always looking for ways to earn more by working smarter, not harder and I think it’s important to take a break from driving every once in a while to reflect on ways to improve your driving strategy and increase your bottom line.
If you’re just in it to get in the car and drive, great. But if you’re like me, you probably want to maximize your revenue and figure out what the best strategies to drive are that fit in with your lifestyle. And since not everyone has the time to analyze a week’s worth of rides, I’ve done it for you!
The Takeaway: I tracked all my rides for a full week of driving in Los Angeles and averaged around $24 per hour before expenses. During the slower weekdays, I was closer to $15-$20 per hour but during a busy Saturday night, I made $262 over 8 hours of driving ($33.16 per hour) plus an extra $80 for hitting my 20 trip incentive. I also calculated how much I earned after expenses and taxes, since that’s something that drivers often overlook.
When to Drive?
Traffic is terrible in Los Angeles and the situation is exacerbated for rideshare drivers since the per minute rates are so much lower than the per mile rates. Uber drivers in Los Angeles earn just $0.15 per minute and $0.90 per mile. So your waiting rate as a driver is just $6.75 an hour after Uber’s 25% commission, which is way less than the California minimum wage of $10.50 per hour:
Personally, I don’t like sitting in traffic and, although it’s hard to avoid in Los Angeles, you definitely see less of it after 7-8 pm on the weekdays and after 5-6 pm on the weekends. Less traffic means less waiting and more paid miles you can put on your vehicle, thus increasing your earnings.
Uber and Lyft tend to be busiest on the weekends during the party hours when everyone’s going out, but rides are also at high demand during commuting hours since many people take Uber and Lyft to and from work. I’ve been driving for over three years and although there’s no magic formula for when to drive, I prefer doing nights after traffic dies down and that’s where I focused most of my efforts for this experiment.
Wednesday March 8th, 2017
For my first shift, I decided to put a few hours in on a Wednesday evening. I’m a big proponent of driving for multiple services, and I was also excited to try out a new app that I learned about from UberMan called Mystro. It automates your ability to drive for Uber and Lyft by logging you on to both apps simultaneously and then accepting the first request that comes in while simultaneously logging you off of the other app.
So let’s say you’re online with Uber and Lyft, and you get an Uber request. You can sit back while the Mystro app accepts the Uber request and then logs you off of Lyft. Once your Uber trip is completed and you’ve rated your passenger, it automatically puts you back online with Lyft and waiting for dual requests. Pretty cool! Here are a few screenshots of the Mystro app in action:
Mystro is currently looking for beta testers for their Android app and you can sign-up here using our code RSGB3171. I have to say that I was thoroughly impressed with the app and, even though I’ve only been using it for a few weeks, I see a TON of potential for drivers. Make sure you subscribe to our e-mail newsletter so you’re on the list when we do our full review of the Mystro app.
Mainly Uber Rides
On this night, Uber actually dominated my ride request ratio. I got a couple Lyft requests that ended up canceling, but of the eight rides I completed, 7 came from Uber and just 1 was with Lyft. You can also see that I received three minimum fares on this night which only nets $2.80 after Uber’s commission and booking fee. Total income killers!
The real saving grace for this night though was a long ride I got from Long Beach all the way to Los Angeles which netted me a cool $24.93. Obviously I’d love to have as many rides on surge as possible, but 20-30 miles is an ideal distance for a driver if there’s no traffic or surge. You won’t be too far away from home but you also get to take advantage of the increased utilization that comes with longer trips.
Remember, drivers are only paid when there’s a rider in your vehicle, so you want to maximize the miles you drive with a passenger in the car. These are the types of strategies we cover in detail in our video training course so if you’d like to learn more, you can enroll over at Maximum Ridesharing Profits.
This particular ride took 41 minutes since it was mainly freeway driving but the best part was that there was absolutely no traffic. This same exact ride would have taken at least 30-60 minutes longer during the day yet I wouldn’t have made much more because of the low per minute rates. You can play around with our fare calculator here to see how mileage/time affects your payout.
Now even though I was happy to get this ride, you can see that it took me pretty far away from Long Beach where I wanted to end the night. Drivers don’t know where riders are headed until after you’ve arrived and started the trip, so it’s impossible to filter requests that are too far, although I think it’s a feature that Uber should definitely add!
In the past, it was always difficult to ‘end a shift’ near home, but now that Uber has the destination filter available in some markets, you can at least increase your chances of getting a ride headed home.
I was already tired by 10 pm so I decided to call it a night and, as you can see, I only got one ride headed towards my destination (denoted by the star above). It turned out to be a cancellation but I still got $4 for it! So at least it paid for my gas on the way home 🙂
On the night, I ended up working for just over three hours and made $54.60 before expenses or gross earnings of $17.43 per hour. After taking into account my expenses, those numbers dropped to $37 and $11.81 per hour.
Not a lot of money but here are a few main takeaways:
- 20-30 miles without traffic is a real moneymaker ride for a driver.
- It’s important for drivers to find the busiest times and places to drive since that means less downtime and greater chances of surge pricing.
- A 3 hour shift is probably too short since a 45 minute drive home without a passenger will cut into your earnings.
You can find a detailed breakdown of my calculations here for Wednesday March 8th, 2017.
Thursday March 9th, 2017
I don’t like sitting in a car for long stretches of time, so my ideal shift length is around 4-6 hours. And when it’s slow, I always try to get out of the car and stretch to get my blood moving. I guess that’s one of the nice things about driving during the week, since you’ll actually have time to take bathroom breaks and stretch 🙂
On this night, I actually dropped my wife off at Long Beach Airport around 8 pm so I went online in the cell phone waiting lot shortly after. The night was pretty slow, though, and as you can see from my calculations, I averaged almost 7 minutes of down time in-between each ride compared to just 2.5 minutes the night before.
On nights like these, it’s imperative that you’re doing Uber and Lyft since you can see that Lyft made up a solid chunk of my ride total (30%). Without Lyft, my down time would have been even higher!
I ended up driving for almost 4 hours on the dot and I stayed pretty local until the end of the night. Just before 11 pm, I got a nice long ride on Lyft that was 24.1 miles and took 27.5 minutes. It’s kind of a drag to get long rides towards the end of your shift but it also builds character 🙂
You actually have the right to decline ANY trip BUT you don’t know where they’re headed until you arrive and slide to start the trip. So if you see that the destination is too far or you just don’t want to do it, you can explain why to the passenger and let them know they can message Uber/Lyft for a refund, but they’ll still get to rate you.
On slow nights like this, it’s also important to have a good beat on where potential hot spots are. If you’re waiting 7 minutes between rides, you can easily use your phone to look up local concerts, events and sports. And the nice thing about sports like baseball, hockey and basketball for example is that there are a ton of games on the weekdays!
Thursday nights are also the ‘unofficial start to the weekend’ for college kids, so check the map to see if there are any colleges nearby. I got a couple rides on this evening from groups of students heading out to bars near Torrance since there are a couple local colleges there.
I drove for almost four hours and I earned $16.19 per hour before expenses or $43.50 after expenses:
- When it’s slow out, you may want to increase the distance you’re willing to drive to pick up a passenger.
- It’s important to drive for both Uber and Lyft in order to increase your request volume.
- Know which events are going on so that you can re-position yourself if you’re going long periods of time without a request.
You can find a detailed breakdown of my calculations here for Thursday March 9th, 2017.
Friday March 10th, 2017
With a couple slow nights out of the way, things finally picked up on Friday. Friday and Saturday nights have always had the highest passenger demand, but you have to remember that if there are a ton of drivers out there to meet that demand, you might not get that many rides. And typically, weekends is when all the part-time drivers come out and drive.
Since it’s so easy to get signed up as an Uber or Lyft driver, there are a lot of people who do it! In fact, one of the biggest complaints we’ve heard from drivers over the past year is that driver saturation is at an all time high. And a lot of those drivers might only come out when it’s busy, so weekends can be hit or miss.
Here are my results from Friday night:
My gross pay per hour went up to $19.50 because of a few Uber surge rides and tips, but the biggest jump was my ‘Profit Per Mile’ which takes into account gas, depreciation and maintenance on my vehicle. Despite driving fewer miles (only 76.5) than on Wednesday (80.9) and Thursday nights (94.7), not only did I make more per hour, I was over 80% more efficient!
This is why your gross earnings are important and look great but the real number that you should care about is your ‘Profit Per Mile’ or ‘Take Home Pay After Expenses’. For a lot of folks, $15/hour after expenses is pretty solid for a few hours of work on a Friday night.
You can also use QuickBooks Self-Employed to measure expenses and mileage in order to get a more accurate view of your true operating profit.
Let’s Get Tipsy
Lyft made up 25% of my rides on this night, but my total Lyft earnings were actually 33% of my pay since I was tipped on both Lyft rides I did AND I got a $10 cancellation fee for a no show on a ‘Scheduled Lyft ride’.
Even though I’ve always gotten more rides with Uber, I think Lyft treats their drivers better (instead of just talking about it like Uber) and has a more driver-friendly culture. One of the ways this pays off for drivers is that there are more opportunities to impress your passengers with things like safe driving or conversation and get tipped!
Related Video: What’s the difference between Lyft and Uber?
On this night, I actually had two great conversations with both of my Lyft passengers and received two generous tips:
Uber and Lyft have about the same per mile and per minute rates in most cities, but the potential for tips is a great reason to sign up for Lyft. In fact, the in-app tipping option is a big reason why Lyft drivers report earning more and being more satisfied than their counterparts at Uber.
I’ve always liked to do my best, and one of the things I dislike about Uber is that there’s no incentive to go above and beyond. But with Lyft, you can receive tips in the app and better drivers are rewarded for better service.
Saturday March 11th, 2017
On Saturday, I decided to focus on Uber since I noticed a ‘Quest Bonus’ on my app where I could make an additional $80 for doing just 20 trips.
Uber has gotten better at handling these incentives over the years, but we still receive a TON of driver complaints since the offers can be complicated. You really need to read the fine print and it also encourages you to get started on these promotions as early in the week as possible. To Uber’s credit though, they’ve added ‘bonus tracking’ features as seen above so you can at least track your progress.
Related Article: What to do when Uber stiffs you on a guarantee
Not every city has these incentive offers though and, even within the same city, different drivers may get different offers. A couple other LA drivers commented on our Facebook Page that they actually got different offers on the exact same weekend to do 55 trips in order to earn just $70.
We don’t know for sure who gets which offers, but it seems like if you don’t drive for Uber for a few weeks, they get jealous and send you more enticing offers than regular drivers. In fact, the very next week my offer dropped to $50 after 15 rides – still not a bad offer but not as high as the $4 per trip incentive they gave me the week before.
This is another good reason to diversify, since these companies often send out competing offers to entice drivers to work for them. Most drivers have already signed up with Lyft but if you’re not busy enough there, you can always add a delivery service like Postmates or DoorDash.
My Saturday Night Stats
I ended up doing 22 Uber rides on Saturday night in just under 8 hours. The 20 trip bonus incentive really kept me motivated and I actually drove until 2:30 am. When I finally hit my 20 trips, I did a little happy dance and added up my earnings. Note, the $80 bonus is on top of what I made below:
This was probably one of my best nights driving for Uber in a while and it was really the perfect storm: lots of surge and boost rides, a few long rides and some good luck. I drove from around 7 pm to 3 am and surprisingly, I only had one group of ‘drunks‘ the entire night. Driving drunks can get old pretty fast but it’s kind of fun in small doses in my opinion.
Here’s a time lapse video of my night and where I went from my mileage tracking app:
I ended up getting several lucrative long trips, although I probably got a little lucky here and should have done more to rack up short rides in order to get the 20 trip incentive faster. One of the trends you’ll notice as you start driving more is that short trips occur most frequently near bars/restaurants/mall type venues.
Some drivers will actually turn off their app after a bar drop-off and drive 5-10 minutes away so they don’t get any minimum fare bar hop type rides. Sitting in bar traffic, finding the rider, and/or waiting for the rider is something to avoid since it’s all unpaid time! But when you’re on a per trip incentive, you want to find those short rides since it helps you meet the terms faster.
Efficiency Means More $$
If you take a look at my efficiency numbers for this night, you’ll also see that I spent a lot of time with a passenger. In fact, I spent over 70% of my time with a passenger which led to big earnings and I only had around 2 minutes of down time in-between passengers.
I don’t know if there’s a whole lot you can do about down time – it’s either busy or it isn’t. But in my opinion, you can have a big impact on the average drive time to your passenger since Uber no longer deactivates drivers for low acceptance rates (although they may put you in time-out if you ignore three in a row).
As a driver, you can use that rule to your advantage to filter out high ETA requests (the Mystro app actually does this for you – use our code RSGB3171 if you’d like to try it out). This won’t work when it’s slow since you don’t want to have too much down time but when it’s busy and requests are flying in I’ve noticed that you can still get pulled 5-10 minutes away. But by ignoring that request, you give yourself another chance of getting a much closer request.
I had several 2-3 min ETA requests that only ended up taking me 1-2 minutes to get to and this leads to super high efficiency and much higher earnings.
Base Pay vs Surge Pay vs Bonus Pay
One of the nice things about driving in a busy market like LA or San Francisco is that in addition to the per trip incentives, Uber also offers earnings boost if you drive during certain times and places. A lot of drivers in smaller markets complain that they don’t get the same incentives and, while that’s true to a certain degree, Uber and Lyft have been reducing the weekly incentives offered to drivers in the big markets as of late.
The same is true with surge although from what I’ve seen, smaller to mid size markets surge almost as much on the weekends as big cities like LA, but during the week, there’s rarely surge. So if we ignore the weekly trip incentive, you can see that base fare and surge actually made up 95% of my pay.
If we ignore surge and boost completely and just focus on base fare then my gross hourly earnings would have been 72% * $33.16 or $23.88 per hour. And if we look at earnings after expenses, 72% * $27.48 leaves us with $19.79 per hour. So if you’re in a market without much surge or incentives, the maximum amount you’ll probably be able to make is around $20 per hour after expenses.
Recap of My Week of Driving
For the week, I ended up driving just over 19 hours and made a total of $459.18 plus an $80 bonus. If we ignore the bonus though and subtract my expenses, my net earnings were $359.53 for the week or $18.91 per hour.
I’ve always targeted the most profitable times and places to drive and even though drivers don’t make as much as they used to, you can see that there’s still a lot of opportunity if you carefully select when/where you drive. In order to really maximize your earnings, here’s my best advice:
- Focus on longer rides. You can see from my Saturday night numbers that 70% of the miles I drove were with a paying passenger in the car. And while you can’t directly control the distance, you can try to avoid shorter fares by staying away from bar areas in-between 10 pm and 1 am and carefully studying the pick-up location. In fact, almost all of my longer rides originated from a personal residence rather than a bar/restaurant/etc.
- Drive when it’s busy! You can’t guarantee that every Saturday night is going to be busy but it may be the safest bet. When it’s busy, your down time will be low and you can be pickier with the requests you accept, which allows you to minimize things like ‘drive time to a passenger’. This is one area that I didn’t do a very good job of but going forward, I’m going to be a lot stricter with the ETAs I accept when it’s busy out.
- Avoid traffic. I didn’t run into many problems with traffic, but traffic can only hurt your earnings. It’s tough to avoid in a place like Los Angeles but there are strategies you can use to avoid it. Sometimes it’s ok to turn your app off and drive away from traffic or try to avoid it. And there are times like early mornings (4-7 am) where there’s no traffic and lots of long airport runs that you can experiment with.
Uber Beats Lyft (Sort Of)
I drove for both Uber and Lyft on Wednesday through Friday and over the three day period, I got 23 Uber rides (77%) and 7 Lyft rides (23%). But my Lyft earnings were actually 33% of my total earnings for the same time period. This ratio is pretty standard in my experience although in bigger cities, you may be able to get a more even distribution between Lyft and Uber rides. And in some places, drivers are actually switching to Lyft full time since you can earn significantly more with tips and the Power Driver Bonus.
Related Article: What’s it like to give up Uber for a week and drive for Lyft?
Uber’s also had a ton of bad press lately and Lyft drivers are reporting that things are busier in most cities because of it. So now is a good time to sign up with Lyft and take advantage of the extra rides.
Bonus Pay is Big $$
If we include my $80 bonus in my Saturday night earnings, I made $336.97 before expenses in just one night. That’s a lot of money, and the best part about a bonus is that you don’t have to increase your expenses to get it. So my net pay after expenses (including the bonus) for Saturday night was $297.06 or $37.60 per hour!
It’s important to note that the bonus offer I got during this week was higher than what other drivers in my market received probably because I hadn’t driven for a couple weeks and some cities don’t receive bonus offers at all.
How Much Did I Make in Tips?
Over the week (52 total rides), I ended up getting two cash tips on Uber (45 rides) for $8 and $7 in tips from my 7 Lyft rides. That’s kind of a small sample size for Lyft rides, but in my experience, I get tipped around 20-40% of the time so it’s right in line with my average.
A lot of drivers struggle with navigation and safe driving, but once you’ve mastered that, I think one of the best ways to get higher tips is to engage in meaningful and thoughtful conversation. We recently interviewed a driver about this topic and he had some great tips but here are a couple of my own:
- Read personal development books: I just finished Dale Carnegie’s How to Win Friends and Influence People and I have to say that it is one of the best books on dealing with people I’ve ever read. I have been recommending it to everyone and there are great lessons for your personal and professional life.
- Have a genuine interest in your passenger: If you’re faking it, people can tell. Don’t spend the whole time talking about your interests – ask your passenger what they’re interested in and have something meaningful ready to say.
What About Tips on Uber?
I was able to garner $8 in cash tips on Uber over 45 rides, so even though some Uber passengers will tip, I wouldn’t count on it. Many drivers are using tipping signs and boxes though in order to get more tips. In fact, we tested some a while back and while they’re not for everyone, they do work.
20 vs 25% Commission
Since I signed up with Uber and Lyft a few years ago, I’m actually grandfathered in at the old 20% commission rate. New drivers will pay 25% commission, so what would the numbers look like if we use a 25% commission rate?
The numbers aren’t a whole lot different, but you will make a couple dollars per hour less on the gross pay side and one dollar per hour less on the after expenses side. The nice thing about a higher commission is that it won’t affect your expenses.
There’s not a whole lot you can do to avoid the high commission Uber and Lyft take (it’s actually closer to 40% when you take into account the booking fee) but it is a good reason to sign up with services early on. It wouldn’t surprise me if other delivery services eventually increase their commissions, so if you are even considering signing up for a service like Postmates or DoorDash, do it now and lock in a lower commission rate in case they raise it in the future.
What Are My Vehicle Costs?
My Lexus SUV is not the ideal rideshare vehicle, but it does qualify for UberSELECT and my riders love it. Even though it’s older, they always remark how nice it is. I think having a nice car may help a bit with ratings, but it won’t help you earn more money.
The ideal vehicle is something that’s comfortable and economical but gets great gas mileage! I input 23 MPG and a gas cost of $2.75 per gallon for my vehicle costs into our spreadsheet. And if you use our method, you can actually calculate the cost of your own vehicle including expenses like depreciation and maintenance.
Related Article: How to Calculate Cost Per Mile Instead of Earnings Per Hour
The vehicle cost that I came up with was 21 cents per mile with a fixed daily insurance cost of $0.99. Remember, drivers should also get rideshare insurance and, since that’s a fixed cost, it’s the same whether you drive a lot or a little.
A lot of drivers look at how much money they’re earning and subtract gas and call it a day but they’re forgetting about maintenance and depreciation. You can see that my profit per mile was at its highest on Saturday night which is a good indicator of how efficiently you’re driving. Or think of it this way: it’s better to drive 100 miles and make $100 than to drive 200 miles and make $100. Your cost per mile is a good way to measure that.
If you are leasing or renting a vehicle, then it’s a lot easier for you to calculate your expenses. Just subtract your weekly payment and gas from your earnings and you have your net profit. We looked at the vehicle marketplace Hyrecar – which rents cars to Uber and Lyft drivers and found that most rentals averaged around $30-$40/day.
Related: Uber and Lyft Vehicle Marketplace
How Much Will I Owe in Taxes?
One of the best parts about being a 1099 contractor is that if you do a good job tracking your miles and expenses using an app like Stride Drive or QuickBooks Self-Employed, you won’t have to pay much in taxes. You can see that in just 19 hours of driving I put a total of 466 miles on my car! A full-time driver will easily put 1,000 miles a week or more on their car.
And even though your car may only cost 20-30 cents a mile to operate, you can still deduct 53.5 cents per mile on your taxes!
Over the course of the week, I earned $459.18 before expenses and taxes. If we assume a 15% federal tax bracket plus FICA/Medicare of 15.3%, my marginal tax bracket is 30.3% but since I get to take a $249.31 mileage deduction (466*.535), I only have to pay taxes on $209.87 (459.18-249.31).
So my total taxes paid are only $63.59 ($209.87*30.3%) even though I earned a total of $459.18 which means my effective tax rate is only 13.85%. So for my estimated taxes, I now know that I should save about 13.85%, but I’ll probably do 20% just to be safe.
How Do My Earnings Compare to Other Drivers?
At the beginning of the year, we surveyed over 1,100 drivers and found that the average Uber driver reported earning $15.68 per hour before expenses.
During my week of driving, I made $24.15 per hour before expenses which is almost $9 per hour higher than the national average. But the discrepancy can be explained by two main factors: where I drive and when I drive.
Driving in Los Angeles is more profitable than smaller cities because there’s always decent demand. And since I like to focus on the busiest times/places to drive, my earnings are also going to be higher than another driver in Los Angeles who drives during the middle of the day on the weekdays.
You can see that clearly from the table above where my weekday earnings ranged from $16-$17 per hour but jumped up on Friday night and especially Saturday night all the way to $33 per hour.
Want to Use Our Spreadsheet?
You can download a free copy of our template by clicking here. And we’ve also recorded an instructional video below:
Drivers, what do you think about the earnings potential in 2017? What have you done to maximize your income?
-Harry @ RSG