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Maybe you’ve heard from friends that driving for Uber can make you a extra spending money? Or maybe you’re ready for a career change in your career and driving Uber can pay your bills. You’re probably wondering exactly how much you can make driving for Uber.
The first important thing to understand when figuring out how much Uber drivers make, is that there is a difference between how much revenue you bring in and how much you profit. There are a number of expenses when it comes to driving for Uber. The most significant is the cost of gas, insurance, and the wear and tear on your vehicle from ferrying people across town or home after a night out. After that, Uber’s fees takes a huge chunk out of driver’s revenue.
On this page:
- How Fares Are Calculated
- Surge’s Impact on Income
- So Much Do They Make?
- How Do You Get Started?
- How Do Taxes Factor In?
- Alternatives to Uber
The most significant is the cost of gas, insurance, and the wear and tear on your vehicle from ferrying people across town or home after a night out. After that, Uber’s fees takes a huge chunk out of driver’s revenue.
Many UBER drivers also offer other premiums like free water bottles, gum, or candy. Those extras might result in higher tips, but they’ll also result in additional costs. Don’t own your own car? You’ll have extra costs when it comes to financing or lease payments. Want to upgrade your car in order to get more fares? You’ll have to put money aside to pay for that.
Another thing to keep in mind is that when you drive for Uber, you don’t get the same benefits that you would get from other types of jobs. For example, you’ll have to pay for your own health insurance, dental coverage, retirement plan, and other you’ll have to pay self-employed taxes. That means that the amount you might make per hour driving for Uber might seem like more than it actually is since you’ll have to take the added costs of paying for your benefits out of pocket into account.
How Uber Calculates a Fare
To understand how much Uber drivers make, it’s important to know how much passengers are being charged for rides. The actual amount of a fare is a calculation of time and distance. For each minute that they’re in an Uber car, passengers are charged a specific amount. In addition, for each mile that they travel, passengers are charged a specific amount.
But in addition to that, there is a Rider Fee that is charged by Uber which is meant to cover things like background checks for drivers, and other expenses related to onboarding drivers. The amount that a passenger pays also depends on your city and the type of Uber they ask for. Uber also takes a 20% cut of the final fare.
When you add in expenses, the amount that an Uber driver actually takes home at the end of the night might be far less than the passenger pays. Just how much will depend on the driver’s particular expenses. While some are fixed – like the amount that UBER takes, and the cost of gas, others are variable.
If you own your own car, you won’t have to factor in financing costs or if your car is better on gas, you might not have to pay as much for gas. Similarly, cars depreciate and require maintenance at different rates – so the cost of the wear and tear on your car will widely vary depending on what make or model you drive.
According to Ridester, a rideshare industry blog, the average amount of budget for ride-related expenses is 20% of the fare.
The Impact of Surge on Your Income
If you’re familiar with UBER, you know about surge pricing. Surge pricing comes into effect when there is a high demand for rides. During that window, fares can increase. This is one way that UBER controls demand for its services and also helps reposition drivers in order to better service its customers.
Surge pricing could come into effect if there is a huge demand for rides across your city or if there is increased demand in a specific part of the city. Basically, a passenger pays a multiple of the normal fare. For example, you could see a multiple of 2x the normal fare in one area of the city. Drivers will then be more likely to prioritize picking up passengers in that area to take advantage of the additional pay.
Uber also sometimes guarantees hour rates for drivers during periods of extreme demand to ensure that more drivers are willing to drive during that period.
How Much Do Uber Drivers Make?
One of the benefits of driving for Uber is that you can drive as much or as little as you want. The more you drive, the more you can make. Of course, this is limited by the demand for rides in your city and the number of drivers that are on the Uber network in your region.
That said, Uber reports that 80% of their drivers are on the road fewer than 35 hours per week in their 30 largest markets and over half of all drivers drive between 1 and 15 hours a week.
For that reason, the best way to measure an UBER driver’s earnings is to look at how much they earn per hour. This is actually a hard thing to find since Uber doesn’t regularly release numbers – although Uber does claim some drivers an average of $19 per hour in its top 20 markets.
But that number doesn’t take into account expenses. So, to find out how much drivers really made and took home, we had to look at independent studies online that have surveyed drivers and other data to give us a better idea of how much Uber drivers really make.
Survey by Ride Sharing Driver
A study by the website Ride Sharing Driver looked at drivers across the US and found that drivers made an average of $15.73 per hour before accounting for expenses. After deducting the cost of operating their car, however, the drivers in that study only made $11.93 per hour.
In total, they found that drivers worked an average of 1,108.59 hours per year, and averaged 1,959 trips. That added up to an average of 21,035.98 miles driven and $20,217.74 in earnings. On top of that, they earned an average of $1,935.21 in surge earnings, $464.86 in boost earnings and $590 in bonuses and other incentives. Uber fees then took a very large chunk out of that at $5,634.93.
Making $15.73 per hour in gross pay worked out to $0.83 gross per mile or $8.90 gross per trip.
Study by Ridester
The second study that we looked at was conducted by Ridester. Ridester is an online site that provides content for drivers of ride sharing companies. They estimate that once you factor in 20% of your fare as ride related expenses, as well as pickup, drop-off, and dead time – a driver can make up to $15 to $20 per hour if they are able to get 2 rides per hour. Not able to get that many rides? You could end up making far less.
SherpaShare is an analytics site where rideshare drivers can track their earnings. For that reason, their date is likely to be fairly accurate. They have looked at how much Uber drivers make across the country and they found a grim picture. Their data found that many new Uber drivers struggled to make more than minimum wage.
In fact, they found that most drivers are making less than $11 per hour with most cities other than New York ranging on average between $8.80 and $11.
New York rounded out their list as the place where UBER drivers could make the most money with an average hourly net income of $20.54 after their expenses. Other notable cities included Boston where drivers made $12.80 on average after expenses and Chicago where drivers made an average of $10.24 per hour after expense. Of the cities that they looked at, Nashville came in at the worst earnings with Uber drivers only making $8.11 per hour.
How Do You Get Started Driving for Uber?
In order to drive for UBER, you have to meet a few requirements. These rules specify that you must be at least 21 years old and have at least one year of driving experience in the US or 3 years if you’re under 23 years old. In addition, you must have a valid US driver’s license, and access to an eligible 4 door vehicle.
During your application process, you’ll be asked to share certain documents with Uber including a copy of your US driver’s license, and copies of your vehicle registration and insurance. After that, you’ll also have to complete an online driver screening which will look at your driving record and your criminal history.
The whole process is fairly quick if you have all the information ready. The online application takes only a few minutes and then you share the documents. Once you’re approved and have downloaded the app, you can log in and start making money.
How are Taxes Different for an Uber Driver in the United States?
Driving for Uber is not the same as getting a job at a retail store or office. That’s because you’re not technically working for Uber, but you’re an independent contractor who is running their own business. That means that instead of receiving a W-2 form at the end of the year, you’ll get a 1099 form. For that reason, you’ll be able to deduct your miles and expenses on your taxes. You’ll also have to pay income tax and self-employment tax (this includes Social Security and Medicare tax) on your profit.
Like other self-employed people, you’ll have to file different forms on your taxes than you would if you were an employee. While you won’t have to file your personal and Uber business returns separately if you’ve set up your Uber business as a sole proprietorship, you will have to file an IRS Form 1040. You’ll also have to file an IRS Schedule C form which allows you to show a profit or loss from your business. On this form, you’ll list your gross income and then you’ll subtract all your expenses from that amount. Whatever you made after your expenses will be taxed.
When it comes to your expenses, you can choose to deduct a standard mileage rate which is equivalent to 53.5 cents per mile in 2017 or you can account for all your actual car expenses and deduct that. The latter will be more work, but you could get a bigger deduction.
What are Some Alternatives to Driving for Uber
If you’re not convinced that driving for Uber is the right choice for you, there are other options. The most popular alternative car sharing company is Lyft which is Uber’s chief rival, but earnings between the two are relatively comparable.
Other options that are alternatives to Lyft and Uber include rideshare companies designed for women including See Jane Go in Orange County and Long Beach, Safr in Boston and Juno in New York City. Juno gives 50% equity to drivers and they also provide phone and date plans to drivers.
There are also companies like Curb, and Gett. Whether or not you’re able to make money driving for these companies or more money than you would using Uber will depend on your city and the popularity of these other alternative apps as well as their compensation schemes.
The companies that provide rides for women by women might be more popular than others since it provides a different type of service and there could be more demand for those types of services with the increased reports of sexual harassment or assault via typical ride share programs.
However, given that there are more people using Uber, you’re likely to get more passengers per hour by driving for that service even if you might make more per ride with one of the other services.
Before you choose a rideshare service to drive for, do your research and talk to other drivers in the area.
Author: Jeff Gitlen