How Much Can You Make As an Uber Driver?

by | Driving Tips

Established in 2009 and introduced widely in 2010 by Garrett Camp and Travis Kalanick, Ubercab created the new age of booking and paying for taxi service. After 7 years of changes and development, Uber has become popular all over the world. It has been offered drivers an entirely different occupation which allows them to be their own boss, having various choices of working time. A taxi driver in the company can work either full-time or part-time after their 9-to-5 job.

The operating principle of  Uber is that you can work and earn as much as you want, meaning that the more time you drive, the more money you will make. Plus, you will receive your fares weekly, which are automatically deposited directly into your bank account. Besides, Uber has rolled out Instant Pay as a quicker payment, permitting drivers to transfer their current earnings to a debit card account whenever.

How high drivers’ income could be is universally concerned by the public, especially those determining whether or not they should sign a contract with the company. There has been three main questions that one would like to ask as he is under consideration whether he should become an Uber driver. These three questions are:

  • How much does Uber pay?
  • How much could I really make as Uber driver?
  • What could I expect to make as an Uber driver in general?

In this article, all above three questions will be discussed in details.

How does the company calculate your earnings?

This depends on the two factors, comprising of fares and surge.

First, how fares are calculated when you drive with Uber?

When a rider takes a trip with you, they are charged a fare at the end of the ride plus a “Rider Fee”. Each fare is calculated based on how far and how long the trip took to complete. For example, fare for UberX in Los Angeles is currently $0.15 a minute + $0.90 a mile.

Additionally, when demand for rides considerably grows, fares may increase in order to make sure travelers who need a ride can get one. For passengers, surge helps ensure that pickup is available quickly and reliably. For drivers, surge means higher fares and a steady stream of ride requests.

This means that riders will have to pay more money during peak times, when ride requests are made in specific places, and when the supply for cabs overtakes the riders’ demand. You will be noticed which areas have high demand for rides via an online application (such areas will be colored red).

Surge pricing is calculated by multiplying the trip’s total fare by a current surge multiplier. By way of illustration, riders in a surging area must accept a surge multiplier of 1.3x or 2.1x if they want to use the service. This surge multiplier applies to the base, time, and distance of the trip fare.

Now let take example of the case a rider would like to take a ride from West Hollywood to Downtown L.A.  (which is approx. 8 miles and 30 minutes).  Furthermore, let assume that this customer has place his order during peak time by adding a 1.3 surge.

The total amount this passenger has to pay is:

(8 miles x $0.90 + 30 minutes x $0.15) x 1.3 surge + $1.65 Rider Fee = $16.86

Then, how much does Uber pay you? First, $1.65 Rider Fee will be taken out, and then Uber takes 25% of the total fare and you, the driver, will keep 75% of it.

Let return to the above example, the amount you will receive for such drive is:

((8 miles x $0.90 + 30 minutes x $0.15) x 1.3 surge) x 0.75 = $11.41

However, it is important to notice that the above amount is your gross income of such drive. In other words, the $11.41 indicates how much the driver is paid before any expenses. What you should consider for the decision whether or not you should become an Uber driver is your net income rather than gross income. This issue will be discussed in the next section.

How much could you really make as Uber driver?

As mentioned above, if you would like to become an Uber driver, it should be taken into consideration that you yourself must pay relating expenses. These expenses consist of gas, wear and tear on cars, depreciation, cleaning and upkeep expenses, and unexpected odds and ends that you have to buy along the way, and of course, tax.

It means that your net income is lower than gross income. According to a survey made by Ridesharingdriver.com, driver-related expenses vary widely, but these expenses are about 20% to 30% of one’s gross earnings driving for Uber.

Let return to the example above and assume further that the driver will spend 20% of his gross income for driver related expenses. That means his net income, in this case, will be:

$11.41 – 11.4 x 0.20 = $9.13

$9.13 is the approximate net income from the 30 minute-ride of an Uber driver in peaking period.

It is easy to observe that Uber drivers will have higher net income if they choose to work at peak period. You could find the busier hours your areas just by looking at Uber website, it provides a list of what these hours are in your area. For example, for Los Angeles area, the best time zones that one driver should target are Monday-Thursday mornings, Friday evening, all Saturday, and daytime of Sunday.

How much could you really make as Uber driver?

As mentioned above, if you would like to become an Uber driver, it should be taken into consideration that you yourself must pay relating expenses. These expenses consist of gas, wear and tear on cars, depreciation, cleaning and upkeep expenses, and unexpected odds and ends that you have to buy along the way, and of course, tax.

It means that your net income is lower than gross income. According to a survey made by Ridesharingdriver.com, driver-related expenses vary widely, but these expenses are about 20% to 30% of one’s gross earnings driving for Uber.

Let return to the example above and assume further that the driver will spend 20% of his gross income for driver related expenses. That means his net income, in this case, will be:

$11.41 – 11.4 x 0.20 = $9.13

$9.13 is the approximate net income from the 30 minute-ride of an Uber driver in peaking period.

It is easy to observe that Uber drivers will have higher net income if they choose to work at peak period. You could find the busier hours your areas just by looking at Uber website, it provides a list of what these hours are in your area. For example, for Los Angeles area, the best time zones that one driver should target are Monday-Thursday mornings, Friday evening, all Saturday, and daytime of Sunday.

What could you expect to make as an Uber driver in general?

What you are interested in most maybe is the answer of net income per hour. Unfortunately, there is no exact answer for that question since Uber does not pay their drivers hourly. You will never get what you call Uber driver salary when working as an Uber driver. As described above, the gross and net income of Uber driver is calculated based on the fare for every ride that drive makes.

The main principle is that that the more hours you drive, the more you make per hour.

An Uber driver in Los Angeles has stated that his average net income if he drives 10 and a half hours a week, is about $19.53 an hour, but if he increases his working hours to 30 hours a week, he will make closer to $23 an hour.

According to this driver, this is because there is a better chance of getting really high fares due to long distance or high surge pricing. It does not happen every day, but you can surely get lucky if you drive a lot.

The average income of US drivers are illustrate in the below discussion of results of a published survey organized by Ridesharingdriver website. The results of more than 5,000 answers of Uber drivers show that the average driver survey makes $15.73/hour and $0.83/mile before accounting for vehicle expenses.

 
Gross Pay/Hour$15.73
Gross Pay/Mile$0.83
Gross Pay/Trip$8.90

After taken into account driver related expenses, drivers earn approximately $11.93 per hour, and $0.63 per mile.

 
Gas, Maintenance, Tires, Depreciation$0.20/mile
Total Vehicle Expenses$4207.20
Net Earnings$13228.27
Net Pay/Mile$0.63
Net Pay/Hour$11.93

Once again, you should notice that what you really earn per hour could be very different from the average earning of all Uber drivers, depending on where you live and how long you drive a week.

To illustrate that, let take another look at another survey results. This survey collects data from 9,501 drivers (as of January 6, 2017) and it is organized by Alvia website. The result shows that more than half of Uber drivers (53%) report earning between $10 and $20 per hour; and 41% of drivers earn less than $15/hour with 18% reporting less than $10/hr earnings.

What does this survey result imply? It implies that if you currently consider being a part-time Uber driver, you should think carefully since it is likely that you will have less than $10 per hour earning, which means a rather low income.

How much do Uber drivers make in the comparison with Lyft drivers?

You might be also interested in the relative income of an Uber driver compared with that of Lift driver. The table below gives a breakdown of Uber drivers’ net income per hour in a number of cities, compared to Lyft’s.  As indicated in the below chart, Uber driver will earn more, on the average compared to Lift driver in nearly all cities.

Other issues that you also need to know when considering to become an Uber driver

Does Uber pay for your gas and expenses?

No, Uber will not pay you gas and expenses. As an Uber driver, you are required to pay for all of your own expenses including fuel costs.

Uber will also not pay for your car repairs.

What expenses does Uber cover?

  • Car insurance

Uber does carry an insurance policy for all drivers while they are logged in to the app, including (i) Liability and Uninsured Motorists Coverage up to a million dollars, and (ii) Comprehensive/Collision with a thousand dollar deductible while en route to or after picking up passengers.

  • Specific expenses

Uber does pay certain specific expenses. For example: If a passenger vomits into your car, or damages your car, you can use the help system on the Uber driver app to request payment. In such cases,  Uber will charge the passenger a certain amount and deposit it into your account the next day, so that you can get your car cleaned or repaired.

How do Uber drivers pay taxes?

As an Uber driver, you have to pay your own taxes. You need to complete a 1099-K and mail it at the end of the year. You have to pay both self-employment tax and federal income tax on what you earn.

You should be also notice that there are a lot of tax deductions. For example, the IRS allows you deduct $0.535 for every mile driven for business purposes as estimated costs. This can be substantially more than the actual expenses for a car with good gas mileage.

Therefore, you should keep track of your mileage/expenses by using programs like MileIQ or TripLog to automatically track your miles.

Can you work for Uber part-time?

Sure, you can. But as noticed above, you should be careful in this decision since your hour income might be low if you work less hour a week.

Do Uber drivers get tipped?

Uber app does not allow passenger to tip directly. However, good news is many passengers do tip the driver in cash.

Conclusion

Working as a driver for Uber would enhance your earnings by using your own vehicle, and schedule your time as flexibly as possible. You should be notice that your hour net income will significantly increase if you drive more hours per week. Although the data about your possible income may fluctuate significantly, Uber is one amongst advantageous working environments that you ought to consider carefully to.