So How Much Do UBER and Lyft Drivers Make, Really?

If you’ve ever seriously looked into becoming an Uber driver, you probably know the standard sales pitch. With Uber, you can set your own hours! You can work only when you want to work! You can use your own car and be your own boss! And you can make a decent wage on top of that—up to $25 an hour, by some estimates.

Of course, this number is a massive oversimplification. For one thing, it’s an average: Spend a few minutes scouring any Uber driver forum and you’ll find plenty of stories from drivers who made as much as $60 an hour, or as little as $5. The $25 rate may be a reasonably accurate baseline, as far as such things go, but don’t make the mistake of thinking this income is in any way steady or consistent.

Another important point to make is that, while Uber can definitely generate income, it also comes with some expenses—gas money, insurance, the depreciation of your vehicle, and more. So even if you do have $25 coming in each hour, you have to balance that with what you’re paying out.

None of this is meant to suggest that being an Uber driver isn’t a perfectly respectable way to generate an income—whether full-time or just on the side. Rather, we’re simply reminding all aspiring Uber drivers to be realistic, and to consider the question of pay from every angle.

The Cost of an Uber Ride

In trying to understand roughly how much an Uber driver makes, it’s first helpful to know what Uber passengers are paying.  The cost of an Uber fare is based on a simple algorithm—time plus distance travelled. So, passengers pay a flat rate for every minute and for every mile. Additionally, there is a standard Rider Fee, which goes to cover things like driver background checks. Occasionally, SURGE charges are incurred, but only when there is high demand and a low volume of drivers.

All of these fees can vary depending on the market you’re in, which is why we’ve been speaking in generalities. With that said, the average Uber fare is likely—statistically speaking—to fall between $8 and $15.

Now, we must make a couple of notes here. The first is that Uber always takes 20 percent off the top—so even if the passenger does pay $14, the driver will only pocket something like $11. On the flipside, the driver is always compensated for the full fare amount even if special promotions are used. So, if the passenger has a discount code for 20 percent off their ride, that comes out of Uber’s pocket—not the driver’s.

What About Uber Driver Expenses?

That’s basically what Uber drivers can expect in terms of income—but what about expenses? As we’ve mentioned, there are some hidden costs to being an Uber driver, and it’s important to have a clear expectation for what those costs are.

Here’s a quick rundown.

  • Auto insurance. This varies from driver to driver, and may be based on any number of factors—age, driving history, the type of vehicle, and the location.
  • Car payments. Some drivers will own their vehicle outright, of course—and if so, this expense doesn’t really apply. Others may still be paying off their vehicle, while those who don’t own a car may be leasing it directly from Uber.
  • Legal fees. Uber drivers need to pay whatever fees are applicable to maintain a driver’s license and vehicle registration within their state—and again, this varies by geography.
  • Tolls. Drivers have to pay for any tolls they incur, though Uber will add a surcharge for the passenger, which helps defray this cost.
  • Fuel. This is an important one. Uber drivers are required to pay for their own gasoline, and they are not in any way compensated or reimbursed for this. To minimize your gas expenses, check out the GasBuddy app.
  • Vehicle maintenance. Routine oil changes, tire rotations, and other vehicle upkeep falls squarely to the driver.

So how much will you end up shelling out in terms of expenses? It’s impossible to be specific here, as so many of these expenses are variable from driver to driver, but many experts say that around 20 percent of each fare goes to these various costs. Add that to the 20 percent that Uber takes and you’re spending about 40 percent of what you’re making.

YouTuber and UBER Driver, Rideshare Driver Dean, goes over UBER expenses and net profit and the results just may surprise you.

UBER Tax Liabilities and Write Offs

On top of that there are tax liabilities. Remember that when you work for Uber, you’re not a salaried employee but rather an independent contractor. (So, to put it another way, you’ll receive not a W-2 tax form but a 1099—meaning you’ll have a higher tax burden.) There are write-offs that can mitigate these tax liabilities—you can write off your mileage, for instance—and doing so can sometimes help you to more or less break even. This will only work if you’re rigorous in your documentation, however.

Mark J. Kohler, a personal and small business tax and legal expert, put together a concise, yet thorough overview on how to handle your taxes as an UBER driver. Check out the video below:

Can You Make Good Money Driving for Uber?

Looking at aggregate data of how much Uber drivers make, in different markets across the country, it’s clear that some people can make great income this way—but that’s dependent on a lot of factors. Some markets are simply more favorable than others, with large metropolitan areas—think New York City—providing the best opportunities.

Incidentally, data also shows that some markets are more favorable to Uber drivers and others to Lyft drivers—so it’s impossible to say for sure that one of these is better than the other. With that said, we’ll note that there is nothing disallowing you to drive for both, and in fact that might be one way to make your ridesharing pay go a little further.

More generally, those who drive for Uber can look for other gigs to augment their income. Something like VidoTek or UberEats allows drivers to use their car and their phone to earn extra money, with no technical skillset required. In other words, they go well with an Uber gig.

The gigging economy can work for you—but it’s important to be realistic, to get all the facts, and to consider the possibility that one gig alone might not quite pay the bills.

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