At the Rideshare Guy, we are all about driving smart and maximizing earnings for the driver. It is very important that drivers don’t just turn their app on and accept every ride.
However, there are some full-time drivers out there who provide about 80% of the rides. Therefore, it is of utmost importance for them to watch their bottom line. Senior Contributor Sergio Avedian lays out what he does to figure out if he turned a profit for the days he is on the road.
I am a huge believer in driving smart. What does that mean? Rideshare is not a 9 to 5 job; as a driver, I only work when and where the demand outstrips supply in the city of Los Angeles. I also do not believe in just turning my app on and aimlessly driving around accepting every ping.
Why is that? It is because most rides the Uber and Lyft algorithms throw your way are not profitable, specifically the short minimum fare trips.
Before the pandemic, I wrote an article after interviewing 40 Uber and Lyft drivers with shocking results. I was amazed at how cavalier the majority of the drivers were regarding their accounting and profitability.
Which Metrics Should a Driver Use to Figure Out Profitability?
There are many different metrics a driver can utilize to figure out his/her profitability. I will list the top four of them that I use when I drive below.
Do you pay attention to any of them? Do you keep daily records for yourself?
1. Door to Door dollars per hour
Rideshare is not a 9-5 gig but to keep things real, I pay close attention to how many hours I am out there. I clock in from the time I leave my garage and clock out when I return home.
Granted, a lot of people who have regular jobs spend at least an hour or more commuting to and from work, but they don’t get paid for that period. This metric truly provides me with the most honest answer of my success or failure as a driver.
2. Online and Active/Booked dollars per hour
Both Uber and Lyft have a way of twisting how much money drivers make on a given shift. They emphasize Online and Active hours as their measuring stick for success.
Yes, it is one metric that the rideshare world pays close attention to, but I am skeptical of its value in the real world.
What if a driver is taken 100 miles away from his/her home base and has to deadhead home because the DF did not get them close or there were no rides available going in that direction? Is that profitable?
3. Dollars per total miles driven during a shift
This is definitely one to pay close attention to. We all hopefully know what our individual costs are of running our cars per mile and per hour.
Even if you don’t, the IRS mileage deduction of 57 cents a mile is a good starting point. Everyone will have varying results for this metric due to driving different cars, and newer models will have a higher cost of operation simply due to depreciation.
Older cars that have fully depreciated may have elevated costs for maintenance or major expenses for mechanical malfunctions. Anything over $1.50 per mile is acceptable to me. I know what my costs are, DO YOU?
Find common rideshare driver expenses here, and learn how to create a rideshare budget here.
4. Dollars per ride without promotions
This metric is a complicated one, but as we all know Quests and Consecutive Ride Bonuses are a major source of income for a lot of drivers. But we can not assume that they will be as high as they have been over the past few months.
We know that Uber/Lyft will reduce or eliminate all of them when equilibrium is established between passenger demand and driver supply. So, count on them until they are taken away. That’s why I will discuss the importance of surge-only driving in a future article.
Read more here: My Profit Analysis for the Halloween weekend
1. My door-to-door hours for those three days combined were roughly 20. That is $46 gross per hour, and I don’t think there are too many jobs out there that offer the flexibility of rideshare and will pay $46 per hour. CHECK!
2. $61 per Active hour and $60 per Online hour gross – those numbers are phenomenal. CHECK!
3. Over the 3 day Halloween weekend I drove a total of 320 miles, including pickups and deadheading home. I averaged $2.88 per mile, and that is outstanding. CHECK!
4. Without the hefty promotions Uber was offering, I obviously would not have averaged $60 per hour gross. Including tips and excluding promotions, my revenue for the weekend was $588. That comes to about $20 per trip and that is outstanding as well.
Uber pays 60 cents a mile and 21 cents a minute in Los Angeles and most rides are short to medium in length. Why was I able to average $20 per ride? One word, SURGE!
As you can see above, I analyze my numbers after every shift. Driving for Uber/Lyft is hard, and it is not public service. We better watch our bottom line like a hawk. Don’t drive if you are not profitable!
-Sergio @ RSG