Harry here. I’ve always had a problem with the lack of transparency when it comes to TNCs like Uber and Lyft. There are countless examples of this, but today we’re going to focus on the commission they charge their drivers. For an app that just ‘connects passengers and riders’, it sure does seem like they take a big cut, and that number is only increasing.
Over the past few weeks, RSG senior contributor Christian Perea and I have been examining the real commission that Uber takes from its drivers, and today we’re presenting that information in an infographic. If you’d like to share this infographic on your own website, feel free to copy the embed code at the end.
TNCs like Uber and Lyft have long advertised that they charge only a 25% commission of the fares they earn. However, these figures ignore the “Booking Fee” that both companies assess on top of each ride, which goes solely to the TNC. The resulting effects of this fee and the 25% commission mean that when passengers step outside of their Uber and only see a $5 charge, the driver will only get around half of that.
To make matters worse, Uber and Lyft have consistently cut prices so that most drivers are now driving twice as far to earn the same $10 dollars that they made only two years ago. The result is that drivers are forced to drive longer hours while incurring heavier expenses, even with gig job bonuses like the Uber driver sign up bonus and Lyft driver sign up bonus.
To reduce expenses, we recommend seeing if you can deduct your rideshare insurance and mileage from your tax bill using the Stride Tax App.
Related: The Case Against Upfront Pricing
In the infographic below, we examined a collection of UberX trips in San Francisco to show what the real take home pay of an Uber driver looks like and show that these “Booking Fees” translate into a much higher commission than the 25% these companies advertise.
If you’d like to embed this infographic into your own website, please feel free to copy the embed code below:
Of the 37 UberX rides we sampled, our driver rarely paid anything close to a 25% commission to Uber. In fact, the lower the total fare, the higher the commission was for Uber.
This isn’t something they tell you when you’re looking into how to become an Uber driver.
As rates trend down, each ride inevitably becomes less expensive and TNCs are able to capture a higher portion of the individual fare from those rides. And since the companies can process an almost infinite volume of rides at a given time, they stand to benefit the most from rate cuts.
Uber has used the line in the past that ‘fare cuts means higher earnings for drivers’ but after 3 years of fare cuts, we have yet to meet a single driver who feels they’re making more now than they did in the past. This data shows that not only are drivers earning less, but they’re also spending more in expenses (gas and depreciation on their vehicle) to do it. And although we used Uber trips as a baseline, Lyft’s numbers are only slightly better.
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If you’d like to see our calculations, please click here.
Drivers, what do you think about the commission that Uber takes from its drivers? Did you know the real commission is actually a lot higher than 25%?
-Christian @ RSG
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