There’s a lot of people talking about how great ride sharing is and whether it’s genuinely worth setting up shop as a driver themselves. I personally think that ride sharing is a great idea but the question I really want to answer here is whether you can really make money with Uber or not as a driver.
Uber was founded in 2009 as a simple ride share concept that matched a driver and a passenger on a map via GPS tracking. The concept was to save people money on taxi fares and give everyday people a way to make some extra money, much like AirBnB.
There are now over 150,000 drivers in the US alone and the company has a valuation of over 41 Billion dollars… pretty impressive!
I think that most people will agree it’s a great idea and these guys have seen some incredible success in a relatively short amount of time, but the real question is this:
“Will you make a decent amount of money as a driver?”
Let’s go through the process of getting started and see how it stacks up.
To get started you need a reasonably new car (less than 10 years old from what I can gather), a clean criminal history and a smartphone with their app installed.
If you don’t have a smartphone Uber will rent you one for about $10 per week.
You also need to complete a vehicle safety check by a licensed mechanic which may set you back around $100 depending on where you go.
So basically you’ll need a newish car in a safe condition, a clean history and a smartphone. Sounds pretty reasonable so far right?
Categories Of Drivers
Uber categorises drivers according to what kind of car they own and depending on where you fit into is what you’ll be paid for each trip. You’ll get more per trip if you own a luxury vehicle as oppose to a Prius for example.
UberX. This is your everyday run of the mill service for people with normal cars.
UberBlack. A more up market sedan for people looking for something a little more stylish.
UberSUV. This is for people looking to seat up to six people in a trip.
UberLUX. For people who want to ride in top end luxury style cars that are happy to pay the premium.
Keeping It Cool
Uber has a pretty good policy in place where both the driver and the rider get rated after each journey. If you fall below a certain level as a driver, you’ll risk getting booted and the same goes for riders.
If riders are found to be consistently rude or causing trouble in some way then Uber may not send cars to them as often, or at all in some cases.
This makes sure there is accountability on both ends and is probably one of the main reasons why everything is running so smoothly.
How Much Money People Are Really Making Driving
While it does seem like a great way to earn a few extra bucks, how much are people REALLY making with Uber?
According to a recent article by Jonathon Hall and Alan Krueger in 2015 about Uber driver partners in the US, the average earnings were were higher than that of traditional taxi workers and chauffeurs.
The average earnings above are based on the main six cities i the US that Uber operates in at present and varied anywhere from an average of $16.20 to $30.35 per hour depending on the city partners were driving in.
The Benenson Survey Group (BSG) component at the bottom ($19.04 per hour) was based on an independent study commissioned by Uber and takes into account some 20 main operating cities in the US and is said to represent about 85% of all Uber drivers in the US.
So from my understanding the $19.04 would be a closer overall figure for the average earnings of a typical UberX and UberBlack driver combined.
It should also be noted that this comparison did NOT take into account any expenses on the part of the Uber Partner driver. The taxi drivers and chauffeurs did not have to pay expenses such as fuel, insurance, vehicle maintenance as those would be covered by the company they work for in that comparison.
The Ongoing CostBreakdown
This is probably the part that a lot of people overlook when working out if this is really worth their while, the company certainly doesn’t shout this from the rooftops. But I suppose it wouldn’t be very good marketing on their part if they did right?
Here’s some costs to consider when working out if this is a good business opportunity for you, this is what came to my mind and maybe there’s more so feel free to comment at the end of this if you feel I should add something.
While there is some form of included insurance from Uber, it is worth checking with your insurance company as a lot of them do not cover your vehicle for being used as a means to gain an income in commercial manner such as this. This could mean paying a lot more in insurance so definitely check this out before signing up.
This one’s pretty obvious and will vary greatly depending on the kind of car you drive. If I was going to get into this I would be looking for the most economical car I could find, unless I wanted to pursue the luxury route.
The more you pay in fuel, the less profit you’ll make so work out your average fuel consumption when doing your costing.
Wear and Tear
Even when the car is idling it is being ‘worn’ and this is something that you should absolutely consider. Brakes, tyres and general wear and tear should all be considered not to mention that your regular servicing costs will likely increase as your milage goes up.
There is also the devaluing of your car the more miles you rack up and the cost that will be realised when it comes time to sell. The running costs of your car might not be something you care too much about right now, but it all adds up.
If you’re looking to do this full-time then you should factor in the time you’ll be sitting around waiting for a job to come through. If you have other things to do while you are waiting then I don’t see this being too big an issue. If you are planning on working at this full time then downtime is a factor worth looking at.
I think most people get into this as a way to earn some extra cash so the trick is to become good at planning your trips. Perhaps you could take on jobs and run errands while you’re in the area after a job to save on costs and make the most of your downtime between jobs.
One of the biggest complaints I have seen is from people getting fares of $4 from people half an hour or more away from where they live. Factor in the time it takes to get there and back and you’ve just lost money. Of course it won’t always be the case but it’s worth factoring in.
As an independent contractor you will be responsible for keeping a portion of your earnings and paying your own tax every quarter. When you are employed this is done for you but in the case of an Uber business you’ll need to do your own books and pay your own taxes.
While personally I don’t see this as a drawback it is worth mentioning. It is also worth noting that you won’t be getting any sick pay or holiday pay either so accounting for that is also worth your while.
If you don’t have a smartphone then this will cost you more money. You may also need a car charger and a GPS to get around if your phone is not very good for that.
I hope this hasn’t scared anyone off the idea, it’s just food for thought.
The important thing is to keep track of everything and crunch your numbers at the end of the month to work out your overall profit and loss. Only then will you know what sort of business you are running and spot opportunities to improve if possible.
For some people these costs won’t be very high at all while for others it may be high enough to reduce their profit dramatically, it all depends on the individual circumstances.
Recruiting Drivers And Riders
One way to boost your earnings is by building a website to refer both drivers and riders in the way of affiliate marketing. Being so new in the marketplace, this is a largely untapped niche and there is plenty of room for newbies to make money referring other to use Uber.
You can offer riders a discount on their first trip and get a $5 commission when they become a rider. By referring drivers you can make as much as $100 after they complete their first 10 jobs.
It’s not a bad way to go and there is huge potential here, especially since this is such a new service in many places. The link above will show you how to build a free website and get the right training to make it all happen.
Once you get going it’s as simple as signing up for the Uber affiliate program and learning how to maximise your referrals to make more money.
I think Uber could be a great way for people to earn some extra money while pursuing another business or to supplement their income, but I don’t think it’s the best way either.
The bottom line is that with all of the expenses and the actual earnings on the table, it seems like it would be hard to build a real income with. By all means give it a go and I hope it works for you but my thoughts are that it would be a bit of extra money at best for most people.