How Much Money Can You Make Driving For Uber Or Lyft ?

For the last few years, especially the previous year when the pandemic raged, the demand for ridesharing apps has been increasing. While the shift towards a gig economy has mostly been responsible for this, the reliability and affordability of ridesharing taxis over traditional cabs has also resulted in an increase in demand for them. 

Most Uber Or Lyft drivers are attracted by the liberty offered in ridesharing, which makes it a perfect side hustle if you have enough free time. And if there is one thing that thousands of people have right now, with layoffs, part-time working, and working from home, it is loads of free time and an idle car in the driveway.

How Much Do People Earn Driving Uber and Lyft

Various studies and surveys, including Uber’s statement, have revealed that Uber drivers make around $19 per hour on average. Uber Estimate also puts the earning per ride amount at $19-24. Calculations with average values put the amount at around $14. At the same time, most drivers seem to be earning much less per hour of driving. Most surveyors estimate it within $8 and $12. However, many drivers may earn even as little as $4 per hour. 

According to Earnest, the average earning per month is $364, and the median is $155 for Uber drivers. For Lyft drivers, the average per month stands at $377, and the median per month at $210. In the meantime, Indeed caps the average earning per year for Uber drivers at $31,218, which is 35% below the national average. The various discrepancies arise due to the freelancing nature of the job. Much depends on how many hours the driver puts in and the condition of their car.

There are also several external factors at play in determining the earning of a driver, like a surge pricing, rush hours, and location. Also, Lyft or Uber takes a percentage of the earnings as commission. On top of that, there are numerous overhead expenses and hidden costs that must be factored into the final answer. 

Calculating The Earning Of A Uber Or Lyft Driver

There is an equation that can be used to calculate the amount a driver earns per ride. The variables used in the equation are Base Fare, Minute Rate, Minutes Travelled, Distance Rate, Distance Travelled, and Booking Fee. For the sake of the equation, we will shorten these to BR, MR, MT, DR, DT, and BF. 

Putting them in the equation, we can calculate the Final Ride Fare or FRF as:

FRF = BR + (MR x MT) + (DR x DT) + BF

The base fare differs from region to region and is fixed depending on a number of factors, the most important being average ride length and average ride availability. The minute rate and distance rate again depend mostly on average ride average duration and average ride distance. The booking fee is added to every ride and is charged from the rider for taking up the slot of a driver.

Factors Affecting The Amount Earned By A Uber Or Lyft Driver

What an Uber or Lyft driver earns depends greatly on several factors that have a significant influence on the final amount. The differences are so much that it is considered pretty much impossible to calculate an average that correctly reflects the nature of the earnings of different drivers. These factors are discussed here:

• Location :

  Perhaps the factor with the maximum weightage on what an Uber or Lyft driver will earn is the location in which they ply. Urban areas are bound to earn a driver more than what a rural or even suburban area can earn them. Much of this is due to the fact that inflation rates and living costs are much higher in cities than in the suburbs or the countryside. 

Outskirts too are notoriously low-earning areas. Within these regions, places that see more traffic will help drivers earn more. Office areas, shopping hotspots, all pull more traffic, and most people will go for ridesharing cabs for reaching their destination.

• Timing :

There are mostly two times during a day when rush hours hit. One is in the morning when students and office goers leave for their respective institutions. The other is in the afternoon or the evening when these very people are looking for ways to reach home. Drivers who take advantage of these rush hours not only earn more by finding more rides but also earn due to the surge pricing that would kick in at these times.

• The Number Of Hours Worked :

  

  This seems like a very obvious factor, and it is. However, there is a catch in all of this due to the fact that there are no fixed working hours as such. 

A driver can work as long as they want and as little as they wish. It means that if a driver works no more than an hour in a week and earns, say, $20, while another driver works ten hours per day and also earns $20 on an average per hour, their mean earning will be the same, yet the first driver would have earned only $20 in the entire week while the second one earned $1400. 

• Surge Pricing :

Like any other ridesharing company, Uber and Lyft also apply surge pricing. It refers to an increase in the basal riding price during busy hours or when there is a shortage of available drivers. It is driven by the simple “demand and supply” rule of economics. The surges are proportional to the deficit in drivers compared to the customers. 

Drivers who work during the hours when the surge is active can earn way more in a short time than they would during the slower hours. This is because surges can go as high as three or four times the normal rate.

• The Type Of Ride :

  Again, like all other ridesharing companies, Uber and Lyft offer a variety of options when it comes to what kind of car you want to take to your destination. There are luxury options as well as basic ones. You also have a carpooling option that will take multiple riders along the way, taking the best-suited route and dropping each passenger off at their destination. 

It is the least costly option to choose, with the price rising as you move to the options higher up. But that does not mean that a driver will earn more just because they have the superior car. Depending on the majority of commuters, luxury cars tend to get fewer takers, and so does carpool, especially during rush hours.

• Idle Minutes:

  Under no circumstance is it possible for a Uber or Lyft driver to be constantly plying. There will be gaps between the two rides. Depending on the location, these idle minutes can range from a couple of minutes to even over an hour. While drivers could be clever and minimize these idle times greatly, there is no denying that a lot of the day is lost in these minutes of no work despite wanting to. 

Moreover, if a passenger has requested a ride to a faraway, remote place,  chances are that there will hardly be any passengers who also travel that way. Therefore, in all probability, you will have to make the return trip without any passengers and, therefore, without any income either.

Extra Earning Opportunities Provided By Uber And Lyft

There are the best ways to earn more money by driving for Uber and Lyft. These opportunities are mostly provided by the company itself and include the following:

• Tips – Uber and Lyft have started the system of allowing drivers to accept tips. Like in any other industry, tips can become a successful method to increase your earnings with good service. 

While passengers are not obligated to leave tips, many people are generous enough to tip quite well, especially in the wealthier districts. If you go above and beyond what is expected of you to provide good service and ferry more people, the chances of increasing your earnings through tips rise monumentally.

• Promotional Deals – The Uber driver-side app has multiple features to help you maximize your earnings. Not only does the app let you know where you have a greater chance to be booked, but it also provides bonus amounts for reaching certain goals. These goals either ask the driver to complete a certain number of rides in a given time, for working without interruption, or for driving in certain areas of high traffic during rush hours. 

You can also join Uber Eats or Lyft Essential Deliveries and earn during the meal times when traffic is slower as the demand for online food delivery is higher or for delivering essential supplies to different addresses, respectively.

• Referrals – Referral programs are used by nearly every business in the world to garner more customers. Uber and Lyft also have some exciting referral programs for their drivers. As a current Uber or Lyft driver, you can share your referral code with people you think will be interested. When that person signs up, you get a bonus. The new driver also gets a sign-up bonus, which is offered to encourage more drivers to join the community.

Expenses Incurred As A Uber Or Lyft Driver

One of the major reasons why the earnings of an Uber or Lyft driver turn out to be lower than what the respective companies report is due to the fact that drivers have to bear several expenses that substantially eat into and diminish their final income. These overheads and expenses include the following:

• Commission Taken By Uber Or Lyft:

  All ridesharing companies charge a commission from their partner drivers and Uber and Lyft are no different. At present, Uber charges 25% from its drivers while Lyft charges 20%. However, Lyft drivers also have to pay a sales tax to the city to the tune of 8.875% while the Black Car Fund charges 2.5% as a fee. 

• Expenses For The Car And Driving:

  When you drive a car on a regular or even a semi-regular basis, there are some expenses that show up on a regular basis too. Some of the things you have to pay for are gasoline, parking, car washes, car payments, car maintenance and repair, interior furnishing, license fees, car insurance, liability insurance, tolls, and any other expense that may arise. These expenses also differ from driver to driver.

  

For example, parking fees take up a major portion of expenses for city drivers. A driver operating in an area with heavy traffic and frequent jams will likely see higher than usual gas expenditure. For full-time ridesharing drivers, car maintenance and repair costs will be high. It will be higher if you carry unruly passengers. Of course, during the time you are online on Uber or Lyft, the companies cover you. However, anything that happens in your offline time will be your responsibility only. Other expenses like gas, insurance, and car maintenance may also be tax-deductible.

• Drivers’ Personal Expenses:

  Since a Uber or Lyft driver technically qualifies as self-employed, they will have to pay the self-employment tax to FICA. Chances are, you will receive two tax forms – Form 1099-K and Form 1099-MISC. The former deals with what you earned strictly through driving and the latter count’s miscellaneous earnings like incentives and rewards. 

Moreover, since the ridesharing drivers are not technically fully employed workers with the company, they will also have to look after their own pension savings for whenever they retire, their personal health and liability insurance, their contingency funds, and any other benefits that full-time employees in companies receive. On top of these, you also have to take care of your own meals, meaning that you will have to buy your food and drinks yourself instead of being provided by the company.

How To Maximize Your Earnings As A Uber Or Lyft Driver

Even with all these expenses and taxes, it is still not impossible to earn a profitable amount by working as an Uber or Lyft driver. You will just have to be clever and grab the opportunity the moment you see it. Here are some tips that will help you increase your Uber or Lyft earnings:

• It is important to plan out your day well in advance to optimize your operating location, time, and routes. Having a clear and logical plan allows you to avoid losing money in empty returns, idle minutes, or the slow business itself.
• Tax write-off, insurance coverages, and such should be taken maximum advantage of as these can seriously put a dent in your hard-earned money.
• Work during the rush hours instead of staying away. You will get booked more during this time and earn more too. The same goes for festivities, holidays, and any other big event being held.
• When you notice surge prices getting activated, sign in and make yourself available in that area.
• Track your competition to ensure that you are not going to be fighting for rides. You can do this either by downloading the Uber or Lyft passenger-side app to see the number of cars in the area, since the driver-side app does not show it or a third-party app with the same function. If there are too many drivers in an area with not enough passengers, a driver can see which place is less crowded with the competition with a better chance of finding interested drivers.
• You can also provide high-quality services to encourage more tips and better ratings. Having bottled water in the car, an auxiliary cord for songs, tissues, clean interiors, general courtesy, and so on, are some of the things you must consider. Also, maintain a certain level of hygiene both for you and the car so that people do not get grossed out and cancel the trip.
• You can also push the surge fair higher to help you earn more. If you know a place that will be busy and see a lot of passengers looking for ridesharing cabs at a certain time, you can log out of your app and stay so up until that time starts. Then log back in and continue business here. Having fewer drivers compared to more passengers in the area will push the surge fare higher. Once it has gone high, you can make yourself available and enjoy the higher earnings.
• Try to keep down unnecessary expenses. Because ridesharing drivers tend to stay out a long time, they will need to eat and drink. Instead of ordering from outside, bringing food and drinks from home will save a lot of money. Cutting off the gas during a traffic light or jam will reduce your fuel consumption.
• Try to choose routes and destinations that will guarantee another passenger during the return trip. This is important in both cities and village areas. City drivers would be losing out a lot of business if they take weird routes,  in return drivers based from villages increase the number of trips they do since it is low to start with.
• You can also try to stay near airports and railway stations to pick up passengers since these places will always have a high number of people looking for a taxi.
• You can work for two or more companies at a time. Say you work in Uber and join Uber Eats too. The same goes for Lyft. If you notice that you are not finding any rides in one app, you can always quickly check the other app to see if there are any opportunities to earn there.

How Are Uber And Lyft Drivers Paid

                                                                          Source:

Both Uber and Lyft maintain a weekly Payment cycle and payout at the end of the cycle. For Uber, the cycle starts every Monday at 4 AM and ends the next Monday at 3:59 AM. The payment is made on Tuesday and deposited directly to the bank account of the driver. In case Tuesday is a bank holiday, the payment will be pushed back and the date will be communicated to the driver through his app. However, you do have the option to cash out yourself five times each day with Instant Pay, in which case, you should receive the payment within 6-8 hours.

Lyft starts paying its drivers weekly from Tuesdays at 5 AM. The money takes anywhere between one and three business days to appear in your account. However, you can always cash out faster with Express Pay, which deposits the money within a few hours usually and has a charge of $0.50. Both companies also provide debit cards to drivers that make the payments appear instantly after a ride is completed on the card.

Uber provides the Uber Visa Debit Card powered by GoBank while Lyft provides the Lyft Direct Debit Card. These cards also provide lucrative discounts when shopping at certain places. 

Conclusion

One worrying trend is that most drivers earn far below the minimum wage. Moreover, many complain that after paying for all expenses, they find out that they had spent all their earnings and more, ultimately resulting in a loss. Drivers need to be able to optimize their working style to maximize their earnings. Nowadays, many veteran Uber and Lyft drivers are providing courses and classes to help newbies learn these tactics. Even the companies are now providing tips and tricks and connecting drivers with others to help each other increase their income.