We’ll explain how much money you could make as an Uber or Lyft driver before comparing that to the expenses you’ll likely end up paying while on the job.
Becoming a rideshare driver has helped millions of gig workers supplement their incomes, whether they drive for Uber, Lyft, or both. While making money with your car isn’t a new side hustle, it’s certainly become far more accessible through the rise of ride-hailing, or “rideshare,” services.
As the industry gains in popularity, a greater focus has come on whether Uber and Lyft drivers get a proper return on their investment. Our team has crunched the numbers to determine whether ride-hailing is worth the extra time and money for potential drivers.
How Much Money Do Uber and Lyft Drivers Make?
According to Indeed, full-time Uber drivers average $63,865 per year while Lyft drivers make $71,540 annually. It’s worth noting that earnings per ride depend on the driver’s location, the time and distance of the journey, and the tip given by the passenger.
Peak Driving Hours for Rideshare Services
Some of the peak driving hours for Uber and Lyft come during the following periods:
Between 4 a.m. and 9 a.m. on weekdays
From 3 p.m. to 8 p.m. on weekdays
Between 10 p.m. and 1 a.m. on weekends
It’s worth noting that working late nights, especially on the weekends, could lead to driving intoxicated passengers. While drivers could make a decent amount of money, the hassle may not be worth it for some Uber and Lyft drivers.
High-Demand Cities for Ride-Hailing Services
Cities where Uber and Lyft drivers will find a steady stream of passengers and make a liveable wage include the following:
New York City
While many of these cities have traffic congestion and higher-than-average gas prices, the per-mile rate for Uber and Lyft drivers is strong. Whether your ride-hailing job will be worthwhile or not, though, largely depends on how much time you’re willing to put in and when it would be.
Pay Breakdown for Uber Drivers
Compensation from Uber can be broken down into a few different categories:
Standard trip fare: Uber calculates fares based on the time of day, a trip’s distance and time, and local demand. While Uber is upfront with its pricing regarding how much drivers could make, the standard trip fare is far from standardized.
Surge trip fare: A high demand for drivers adds a multiplier to the standard fare, optimizing earnings on the driver’s behalf.
Cancellation fees: Riders who take a while to connect with their driver pay a waiting fee, but they must also compensate drivers if they cancel a ride. The final cost depends on various factors, like how far you drove before the passenger canceled the ride.
Uber pool: Maximize efficiency by picking up multiple riders along your route to receive higher earnings.
Promotions: Uber offers several promotions that allow drivers to boost their earnings.
Tips: You get to keep 100% of your tips as an Uber driver.
Uber also charges riders a booking fee, but that money goes to the company instead of to the driver.
Pay Breakdown for Lyft Drivers
Lyft pays drivers based on both per-mile and per-minute rates. Like Uber’s standard fare, per-mile rates vary based on your specific location. Per-minute rates help Lyft drivers to account for traffic, but they’re far smaller than the per-mile rate to discourage drivers from idling. Lyft also allows drivers to keep all of their tips and offers certain promotions and bonuses.
The best way to compare potential earnings from Uber and Lyft is by looking at how much current drivers are making with each in your region. It’s good to keep in mind, however, that it’s easier to find potential passengers on Uber due to its greater popularity.
How Many Miles Do Rideshare Drivers Drive per Month?
On average, ride-hailing drivers put 4,000 or more miles on their cars each month. That translates to around 1,000 miles per week, though this depends on how often someone drives. Those in dense cities may spend fewer miles on the road, but more time idling at traffic lights. However, these municipalities also tend to have plenty of customers, leading to very little downtime.
Car Expenses When Driving for Uber or Lyft
Car ownership requires paying for maintenance and additional automotive-related expenses. Because ride-hailing drivers rapidly add miles to their vehicles, it’s smart for them to maintain regular service intervals. Those who drive for Uber and Lyft may need oil changes, for instance, far more often than the average driver. Below are a few automotive expenses you could face.
All vehicle owners must register their cars and pay annual motor vehicle taxes to drive legally. However, many states require that rideshare drivers maintain an additional license. Obtaining this endorsement can cost ride-hailing drivers yearly, and the cost isn’t covered by Uber or Lyft.
Most states require minimum-liability car insurance to legally drive on public roads. On top of that, you’ll need either rideshare insurance or commercial insurance to carry any passengers. Uber provides bodily injury and property damage liability insurance while you have riders, but its coverage doesn’t apply when you’re the only one in the car. Since you’ll be on the road longer than the average driver, your chance of getting into a car accident is higher than for most.
Taxes and Fees
Because ride-hailing drivers work as independent contractors, they must pay self-employment taxes at a 15.3% rate. If you think you’ll owe over $1,000, the IRS expects you to pay estimated quarterly taxes. However, you’ll probably be able to deduct expenses for gas, car insurance, mileage, rider perks like snacks and drinks, and other expenses related to the job.
Uber and Lyft drivers often have to pay for parking, especially in busy cities where spaces are at a premium. Specific costs vary widely and depend on your location. You may be able to claim parking expenses on your taxes, but they’re an upfront expense for most rideshare drivers.
As a ride-hailing driver, you’ll spend more time than the average American at the gas station. You may be able to offset some of the costs with reward credit cards and apps that earn you cash back on gas.
As the miles and years go by, your car will inevitably depreciate. As an Uber or Lyft driver, this process will occur much quicker than for drivers who spend less time behind the wheel. When you try to sell your car in the future, the effects of high mileage and increased wear and tear could lessen its overall value.
Most tires only last for a set amount of miles, and you could wear them out pretty quickly as a ride-hailing driver. Severe weather, poor road conditions, and lack of regular maintenance services like tire rotations and alignments will also rapidly degrade tires.
Routine Maintenance Services
Manufacturer-recommended maintenance intervals typically occur in set mileage increments, but ride-hailing can decrease the time between those milestones. Routine maintenance can include:
Brake pad and rotor replacements
Fluid refills and replacements
Spark plug replacements
Engine and cabin air filter replacements
Many rideshare drivers invest in dash cameras to monitor the road and their passengers. Video evidence can go a long way in helping you to recover damages or dispute claims.
Additionally, Uber requires inspections every year to remain compliant with company standards. While these inspections are free, they also prevent you from driving.
Fees From Uber and Lyft
Uber charges its drivers a service fee to keep the app rolling while they drive. Specific rates vary by trip and don’t correspond to a particular percentage. In addition, you can use Uber’s instant transfer service to cash out your earnings up to five times per day at 85 cents each time.
Lyft takes about 25% of each driver’s earnings, though the exact amount varies. Similar to Uber, Lyft charges 85 cents for an express pay transfer. If you need a car to drive for Lyft, you can rent one through its Express Drive program instead of purchasing a vehicle yourself.
How Much Money Will You Really Make?
It’s no secret that ride-hailing takes an immense toll on your vehicle, especially if you’re driving more than 20 hours per week. However, there are multiple ways to get the best return on investment as you drive for Uber or Lyft.
First off, you can drive a car that’s fuel efficient and cheap to insure. Models with low rates of depreciation can also help to offset the rapid increase in mileage and wear and tear on them. Also, providing strong customer service is an excellent way to boost your tips.
Remember that despite the considerable income you can make by driving for Uber or Lyft, there are also major expenses associated with car repairs, cleaning, and maintenance. To learn more about how to successfully work for a ride-hailing service, read through our article outlining some tips for delivery and rideshare drivers.