Before giving your time to any side hustle, you should know if it’s worth your time; after all, time is money. Driving for Uber is a common side hustle, but is driving for Uber worth it?
Like any job, you should consider the pros and cons, including the costs incurred, the time you spend doing it, and various safety factors. Here’s everything you should consider when deciding if driving for Uber is right for you.
Pros & Cons of Driving for Uber
Driving for Uber has many pros you should consider to determine how it fits into your lifestyle.
- Control Your Schedule: Many side hustles have flexible hours, but Uber takes the cake. First, you set your schedule and can even decide at the last minute to drive. Then, to make yourself available, you switch your availability on the app, and you’ll see available rides in your area when they occur. The only restriction regarding how many hours you can work is your city’s requirements to ensure everyone’s safety.
- The Uber App Directs You: Even if you’re not good at directions or don’t know the area well, the Uber app provides detailed directions when picking up a passenger and driving them to their destination. So you’ll always know where you are going and get there using the most efficient route.
- Make More with Promotions or Surge Pricing: If you drive in a popular city, you may be eligible for surge pricing. This means there are more riders than drivers, and Uber will pay drivers more to accept the rides. Surge pricing is a multiplier to the standard fare, and you can tell when it’s happening when the heat map turns red in certain areas. Uber also offers promotions to encourage drivers to take more trips or drive during certain hours.
- Can Get Paid Instantly: Uber normally pays its drivers weekly, but if you need the money faster, you can use Instant Pay and, for a small fee, receive your funds when you earn them. Uber allows drivers to withdraw funds via Instant Pay up to five times a day; each transfer costs $0.85.
- Keep 100% Of the Customer Tips: Uber pays a standard fare for the drive, but customers can tip drivers too. Any tips you receive, you keep 100% of them; you don’t have to share with Uber. So the better service you provide, the more money you might earn.
- You Choose Your Rides: You can make the most of your routes by choosing your rides. For example, if a ride takes you 40 miles from home, you could pick up rides on the way home to make the most of your drive back instead of incurring ‘dead miles.’ To do this, position yourself on a main road where you’re likely to get ride alerts. Then, if they’re going in your direction, you can pick them up and make money to drive home.
- You’re Responsible for Your Costs: Uber drivers are independent contractors. All expenses you incur to run your business are your responsibility. It’s important to budget the costs and determine if driving for Uber makes sense. Most importantly, you’re responsible for your taxes and will pay self-employment tax, which can decrease your earnings and should be considered.
- May Have to Bump Up Your Insurance: Driving for Uber is a business; your personal insurance may not cover it. Uber covers drivers in certain situations, but there are too many loopholes to take a risk. Before driving for Uber, talk to your insurance company about a rideshare endorsement or commercial auto insurance to ensure you are protected.
- Wear and Tear on Your Car: As an Uber driver, your car is your office. Without your car, you won’t make money, but the constant use of it can cause your car to age faster which may require more frequent maintenance and repairs.
- Long Approval Process: Because Uber has strict driver and vehicle requirements, getting approved can take a while. In the approval process, you must upload documents like your driver’s license and insurance, but you must also pass a background and driving record check and have your vehicle inspected. As a result, it can take 10+ days to get approved.
Cost of Being an Uber Driver
One of the largest factors of being an Uber driver is the cost. This is because you are an independent contractor when you drive for Uber. This means you’re responsible for all costs incurred, including your taxes.
For some, it’s a downside and makes driving for Uber not worth it. Others, however, budget appropriately for the expenses and only take rides that make it worth it.
Here are the common costs of being an Uber driver you should consider.
Cars Wear and Tear Costs
You can’t drive for Uber without an operational car, so this is usually your highest cost. You must keep your vehicle running well, but the constant back and forth can make common parts wear down faster.
You’ll likely need oil changes, new brake pads, and tires more often than if you drove your car only for personal use.
Find a reputable but affordable mechanic in the area to make the most of your business. Build a relationship and work out pricing that makes sense for you to continue running your Uber business.
You’ll likely need more than your personal auto insurance to drive for Uber. When you transport passengers, you are a business, and personal auto insurance doesn’t cover the business use of a vehicle.
Uber provides insurance when you’re active on the app and waiting for a rider or with a rider. However, the limits often aren’t enough to cover common accidents, especially if you don’t have a rider. In that case, they only provide bodily injury and property damage liability insurance; they don’t provide insurance that covers you and your vehicle.
Talk to your insurance provider about a rideshare endorsement if they offer it or purchase commercial auto insurance to cover you when you use your car for business.
Gas is one of the highest costs you’ll incur because you’ll use much more driving people around. Today’s higher gas prices can eat into your earnings quickly, so it’s best to have a car with good fuel economy or use rewards credit cards that pay you back for gas purchases to decrease costs.
Cleaning Supply or Detailing Costs
You should show up with a clean car inside and out to get the best ratings. If you drive for Uber often, your car may get dirty faster than usual. Consider costs for detailing, either professional or DIY, when determining your earnings. If you DIY, you’ll need cleaning supplies and the time to do it, and if you go the professional route, you must pay the fees.
It’s also a good idea to run your car through the wash often so your riders’ first impression isn’t bad.
Taxes are the largest concern when driving for Uber. You are an independent contractor, which means you aren’t an employee. When you work for someone, the employer covers the employer side of taxes, and you pay the employee portion.
As an independent contractor, that’s not the case. You are responsible for both sides of taxes, including a 15.3% self-employment tax.
Because the United States is a pay-as-you-earn country, you must pay your taxes as you earn money. Since you aren’t working for someone, you must pay quarterly estimated taxes. Like when your employer pays taxes on your behalf, you’ll square up with the IRS when you file your taxes. If you overpaid, you’ll receive a refund, and if you underpaid, you’ll owe the difference.
Is Uber Driver Compensation Worth It?
The biggest question is, does Uber pay enough to make it worth it? Since you’re an independent contractor, many of the expenses fall on your shoulders, not to mention the time you put in to work the gig.
Here’s how Uber compensation works.
Standard Fare Trip Compensation
All Uber rides have a standard or base fare. Uber may add amounts for the time or distance too. Each city has different pricing, which may vary by time of day and demand. Some areas pay extra money per minute, and others pay extra per mile.
This can have a large impact on your earnings. For example, if you live in an area where rush hour traffic is at a standstill, and you don’t get an additional per-minute fare, it might not be worth your time.
Surge Trip Compensation
Surge trip compensation is like a bonus for driving during certain periods. Surge fares occur when there is a higher demand for rides than there are riders. This often happens on weekends or during special events. It may also occur during bad weather when many drivers choose not to be active until the weather clears.
Service Fees for Driving
Uber charges a service fee to keep the app going. The fee comes out of your earnings, decreasing how much you take home. The fee is the difference between the fare a rider is charged and how much you get paid.
There isn’t a certain percentage or flat fee you’ll pay; the service fee varies by trip.
Booking Fees for Riders
In addition to charging drivers a service fee, Uber charges riders a booking fee for the same reason. The fees help Uber stay in business, aka make a profit. Like driver service fees, the booking fee varies by trip.
Rider Cancellation Fees
Riders can cancel their trips, but there are certain times they may pay a cancellation fee, including the following:
- You (the driver) already accepted the ride
- You started driving to your location
- You arrived at the pickup location, but the rider did not show
The cost of rider cancellation fees varies based on many factors, including how far you drove to accommodate the request or how long you had to wait for the rider before realizing they were a no-show.
Other Earnings for Drivers
Uber offers a few other ways to earn extra money, including Uber Pool which allows you to pick up other riders while on a route with another passenger, and minimum payouts for short trips.
Happy Customers, Happy Reviews
To make the most money, you want good reviews on Uber. Riders can rate drivers anonymously, so you want to provide the best service possible. Not only that, but happy customers will tip better, which means more money in your pocket.
Do what you can to keep your customers happy by doing the following:
- Keep your car clean inside and out
- Drive safely
- Make conversation if the rider seems to want to talk
- Don’t make conversation if they have earphones in or seem quiet
- Provide a phone charger for those riders who need it
Driving Schedule Requirements
One great thing about Uber is they don’t have scheduling requirements. You can make yourself available anytime and shut it off when you want. If you want to drive for a 4-hour shift, you can, but if you decide mid-shift that you’re done after an hour, you’re welcome to do that too.
Uber doesn’t require minimum shifts per day or week, but your city may set a limit regarding how many hours you can work in a row to ensure the safety of everyone on the road.
4 Tips for Making the Most of Your Driving Time
One of the best ways to ensure you make the most of your time and make driving for Uber worth it is to learn the tricks of maximizing your rides.
1. Learn to Avoid Traffic
Traffic is one factor that can decrease your earnings and make driving for Uber less worthwhile. Sometimes Uber accommodates fares by paying a per-minute fee, but this is one area they lack. You’ll get better pay for driving long distances, but Uber doesn’t adjust your fare when stuck in traffic.
Avoid driving during rush hour to make the most of your time. Also, pay attention to unusual traffic patterns, such as road construction, to avoid routes that might take longer than necessary.
2. Avoid the AirPort Queue
You might find a lot of riders at the airport, but the competition is usually steep, with the area filled with other drivers. In addition, many airports have strict rules for rideshare drivers, which may result in you driving around the airport for long periods while waiting for a ride. This isn’t the best use of your time; it causes excessive wear and tear on your car.
You can likely pick up a few rides within the time you’d wait for one ride at the airport while keeping your costs down and earning more per hour.
3. Find a Resting Place
You might not think driving is tiring, but it can be, especially when the rides come through one after the other. Before you realize it, you’ve been driving for several hours, haven’t used the bathroom, or stretching your legs.
Take breaks to make the most of your time and increase customer satisfaction. Give yourself a few minutes to go to the bathroom, freshen up, stretch your body, and relax your mind.
Driving is hard work because you’re constantly focused, and your body is tense. Give yourself a break, even if for a few minutes, so you feel ready to take on more rides; otherwise, you’ll exhaust yourself and have to quit early.
4. Drive While Driving Home
Driving home after dropping off a rider doesn’t have to be dead time. Sure, you can think of it like a commute home from the office, but why not make money driving home?
If you’re in an area that’s popular for riders, pick one up that’s headed your direction, and you’ll earn a little extra money driving home.
Safety When Driving For Uber
Safety should always be a concern in any job, especially when driving for Uber. While most drivers are safe, Uber implements additional safety factors to ensure your well-being.
Features Provided by Uber
The Uber app has many safety features, including an in-app Emergency Button that instantly calls authorities and RideCheck that monitors your routes and checks in if you go way off course or a crash is suspected.
Other features include:
- GPS tracking.
- A feature that allows family members to track your whereabouts.
- Phone anonymization that keeps your phone number private should you need to contact riders.
In addition, drivers can rate riders, which helps eliminate any dangerous riders or riders who consistently receive low ratings to ensure your safety.
Optional: Dash Camera Security System
While Uber does everything it can to protect drivers, you can take extra steps, such as installing a dashcam. Uber allows drivers to have dashcams to record any issues on the road and anything that happens in the car.
Typically, the presence of a dashcam makes riders act on their best behavior since they don’t know if they’re being recorded.
Uber vs. Other Rideshare Apps
Uber is one of many gig-sharing apps. The most similar app to Uber is Lyft. They have similar requirements to Uber, but Lyft drivers make a couple of dollars more an hour on average than uber drivers.
If you aren’t into driving people around, you might consider one of the delivery gig-sharing apps. Drivers claim they make more per hour delivering food with DoorDash or groceries with Instacart because they don’t have to wait for people, drive them to their destination and wait again. Instead, they make quick deliveries and can move on to the next.
Frequently Asked Questions
Is There a Driving Radius for Uber?
Uber doesn’t have a distance radius riders can request; however, they have a time limit. The trip can take no longer than eight hours; of course, they let drivers know the time required for the trip so you can decide if you should take it.
How Are Uber Trip Fares Calculated?
Uber typically calculates fares based on the estimated time and distance of the trip, the time of day, demand, and route. It also factors in extra costs, such as tolls and other surcharges. If a rider takes an excessive time getting to the car when the driver arrives, this can increase the fare too.
How Do Uber Drivers Receive Their Pay?
Uber transfers earned pay weekly via direct deposit. However, if you want to get paid instantly, you can pay an $0.85 per transfer fee and get access to your funds instantly.
Do Uber Drivers Have the Option to Drive for Uber Eats?
Uber drivers can drive for Uber and Uber Eats. If you’re already approved as a driver, you’re automatically approved to deliver for Uber Eats and can toggle between the two to make the most money.
Do Uber Drivers Have Paid Insurance or Benefits Packages?
Uber drivers don’t get benefits or insurance. Drivers are independent contractors responsible for their taxes and all benefits.
So, Is Driving for Uber Worth It for You?
Driving for Uber is worth it for many people. The key is maximizing your time, minimizing your expenses, and understanding the tricks to make the most of your time driving for Uber.
Avoiding traffic and the airport, keeping customers happy, and doubling up on rides that make sense for the direction you’re going are all great ways to make driving for Uber worth it.