By now, you’ve probably used a ridesharing service like Uber or Lyft instead of a taxi. After all, in some cities like Chicago, you can save $4.50 per trip using Uber instead of a traditional taxi service
Some of you may even be considering becoming an Uber or Lyft driver. Both companies are actively recruiting drivers through sponsored social media and Craigslist advertisements. New Lyft drivers can even earn a $300 sign-up bonus after completing 100 rides in 30 days.
If you believe those ads, driving with a ridesharing service seems like the ideal side gig.
Recently, a reader wrote asking us to find out if ridesharing drivers really do rake in that much cash. We gathered data from a variety of sources and pulled out our calculators. Here’s what we found out:
You might not earn what the companies advertise
I say probably because so much depends on the city you live in, how many hours you drive, your car insurance costs, gas prices in your area, and so on.
Regardless of these factors, it’s unlikely you’ll take home what Uber and Lyft suggest.
To start with, Uber and Lyft, and the city you’re driving in, always get a cut. For example, in New York, Uber’s biggest market, Uber takes a portion of every fare:
- 20% on UberX (the cheapest service)
- 25% on UberBlack (black car service)
- and 28% on UberSUV
Lyft takes 20% of each fare. From that fare, the city also takes a sales tax of 8.875% and the Black Car Fund takes a fee of 2.5%.
But these fees can change at any moment. When you sign up as a driver with Uber, for instance, you agree that Uber can raise the fees they charge drivers, and lower fares for customers, whenever they feel like it.
“Uber has instituted a number of temporary price cuts which then became permanent,” says Dave Sutton, spokesperson, ‘Who’s Driving You?’, a public safety initiative of the Taxicab, Limousine & Paratransit Association. “So, people driving for Uber have no control over surprise cuts to their earnings.”
No wonder Uber drivers have been protesting outside the company’s offices.
From gas to insurance to self-employment taxes, your fees to Uber and Lyft might be the least of a rideshare driver’s worries.
There are the other hidden costs associated with becoming a ridesharing driver, like:
- carwashes and interior detailing
- car payments
- self-employment taxes
And of course, driving a lot (and driving around drunk people who get sick in the back seat) means you’ll be taking your car to the mechanic more often.
“People who use their personal vehicles to drive professionally will be dismayed at the heavy wear and tear placed on their cars,” says Sutton. “Passengers can also ruin vehicles quickly. So, a ridesharing driver may find he has to replace his vehicle after just a few years of driving, much more quickly than he or she would imagine—a huge unanticipated cost.”
So can you make money driving with one of these services? Sure. But will it be a lot of money? Not unless you go about it just like any other business.
How can Uber/Lyft drivers earn more?
As with any business, strategic rideshare drivers will become two or three times as profitable as average.
For example the highest-earning rideshare drivers will learn to minimize expenses, maximize tax write-offs, and position themselves to take advantage of surge pricing to triple their average fare.
Harry Campbell turned his business background and experience as an Uber and Lyft driver in Southern California into an online course that teaches new rideshare drivers everything they need to know about making the most money. Maximum Ridesharing Profits is the simplest and fastest way to earn more as a ridesharing driver.
Read more about Maximum Ridesharing Profits or enroll in the course here.
Ready to start driving?
Getting started as a rideshare driver is pretty easy. First, you’ll go through a few online steps to confirm a service is hiring in your area and that you and your car meet basic requirements. After a background check and some paperwork, you could be off to work!
- Drive with Lyft: Learn more or sign up here. New drivers earn a $300 sign-up bonus after completing 100 rides in 30 days!
- Drive with Uber: Learn more or sign up here.
Any side hustle is better than no side hustle. Rideshare driving is definitely an option to earn extra money on the side, but it’s not easy money—just ask any career cab driver!
Expenses and taxes will take a big cut out of how much you can earn driving with Uber and Lyft, so if you want to earn more, you need to understand how to minimize expenses, optimize your taxes and find the most profitable rides.