Ridesharing has created a lot of buzz these last few years. Ever since Uber came on the scene and disrupted the transportation market — by basically crushing taxi companies in every city they entered — other rideshare companies have popped up hoping to take advantage of that.
Lyft is one of those companies.
But I’m not here to talk to you about why or how ridesharing is taking over. I’m here to find out if there is any money in it for people you and I.
Can you really make money driving for Lyft? Let’s find out.
Can You Really Make Money Driving for Lyft?
Lyft has been around since 2012, and according to Bloomberg news, they have more than 100,000 drivers across the country.
Going on their fourth year, with that many drivers, I think it’s safe to say you can make money there. I doubt all those drivers would continue to work for free, but let’s look a little deeper.
According to Ryder Pearce, founder of SherpaShare (a financial dashboard for rideshare drivers), and a Lyft driver himself, Lyft drivers earn an average of about $25 to $35 per hour.
Lyft claims that drivers can make $35/hour driving for them. If you go to their website and click the “Drive with us” button you are taken to a page where this claim is made boldly.
They even have a handy-dandy calculator you can use to try and figure out your own earnings based on your city and how many hours you want to drive.
I tried out the calculator and got back an amount that was equal to about $20 per hour. Still not bad.
Here’s a screenshot from one Lyft driver who made more than $1,500 with Lyft in one week.
If you look at the hours, you will see this driver worked about seventy hours to make that money.
That works out to be about $21 per hour. It’s below the average, but not a bad hourly rate.
So there you have it. It is definitely possible to make money driving for Lyft.
We have industry reports, claims from Lyft themselves, and a little proof from one of their driver’s.
What’s it Take to Be a Lyft Driver?
Lyft is surprisingly lenient on driver and vehicle requirements, especially when compared to their competitor, Uber.
Uber has an extensive list of vehicle requirements, and multiple categories. Lyft’s are much simpler.
Here’s what Lyft says is required of all drivers and vehicles.
As you can see, this is all pretty standard stuff. Pass a background and DMV check, own a four door and have insurance. Seems simple enough.
You also have to make sure your vehicle is in good condition. Things like your horn and all your lights need to be working, as well as maintaining good tread on the tires.
In most cities, your vehicle needs to be a 2005 or newer. However, this requirement varies state to state, so you will have to check your state to be sure.
Expenses and Other Factors
Now that you have seen the requirements and proof that income is possible, you might be ready to jump in and drive for Lyft. Before you do, let’s take a deeper look at what it’s really like to be a Lyft driver.
What Do Averages Really Mean?
We already know that the national average income for a Lyft driver is somewhere between $20 per hour and $35 per hour. That’s not bad, but those are the averages for the entire country.
If you are trying to calculate your own potential earnings there are some other important factors to consider besides the nationwide averages.
Lyft hires drivers in more than two-hundred cities. So while drivers in cities like New York and LA might earn closer to the maximum hourly rate ($35) drivers in cities like Sanford Florida and Plano Texas earn much less no doubt.
What is important to note here is that these averages are based on drive time — that means, time spent behind the wheel with a fare. If this included total time it would be much less.
The Trouble with Downtime
One of the things rideshare drivers (no matter what company) complain about most is downtime.
You might be on duty for eight hours, but you won’t be driving customers around the whole time.
In fact, drivers experience so much downtime that RideShareGuy.com suggests furthering your education or starting a business while you wait for fares. That seems like an awful lot of downtime.
All this time spent waiting around is what drives down the earnings for drivers, especially drivers in smaller cities. But it’s not just small cities. This is also a problem for drivers in cities where Lyft has just been introduced because people don’t know about it yet.
Taxi drivers report fare time vs total time time to be around 50%. That means, if they work eight hours, only four of them are actually driving customers around. For Lyft drivers, fare times are about 32%.
So while the hourly rate for Lyft drivers is much higher when a fare is in the car, they are 18% less likely to have a fare.
Most Lyft drivers drive for Uber too. Think Uber is better? Check out my analysis of whether or not you can make money with Uber. They try to minimize their downtime by moonlighting with both companies.
More companies are popping up as well, so you could sign up for a few and keep yourself busy. You could even start doing AirBnB and rent out a room in your house or a couch in your living room to take full advantage of the sharing economy!
Paying For Insurance
Insurance is one of the biggest and most important expenses you will have as a Lyft driver. This is a requirement, and one you shouldn’t skimp on.
The cost of insurance will vary state to state, but thanks to NerdWallet.com we can see a breakdown specifically for Lyft drivers.
NerdWallet says, Lyft drivers need at least two rides per week in order to cover insurance costs. Now that is based on an average, but remember these averages can be tricky. For example, a driver in Detroit will need at least six rides to cover insurance.
The Cost of Fuel
Although we’ve covered what insurance might cost you, we still don’t know about some of the many other expenses. Fuel is one of them — and it’s a major expense.
I don’t have to tell you how that the cost of fuel is outrageous and it doesn’t look like it will be going down any time soon.
This expense — probably more than all the rest — is the one that can destroy your profits and make Lyft driving a futile effort in some ways.
You can cut down of fuel in a number of ways, but sometimes you are stuck with what ya’ got. If you drive an SUV, it’s not likely that you are going to downgrade to a smaller car just to drive for Lyft.
The average Lyft trip is about five miles. Most standard sized cars get about twenty to thirty miles to the gallon. So after four trips, you have used a gallon of gas, assuming there wasn’t a lot of traffic, wind, or luggage.
Basically, to pay for your fuel, one in four rides will be free. Well, not “free” but it will go towards your fuel.
Wear and Tear on Your Vehicle
Vehicle wear and tear is one of those things that we just can’t estimate. Some vehicles handle in town driving better than others. Some vehicles are simply better built. Some vehicles should not be on the road at all.
I can tell you this though: as soon as a brand new car is bought and touches the pavement outside of the car lot, it has already lost 11% of its value.
That should give you some idea of what the car industry thinks about wear and tear. And that’s a new car! Imagine a used car with a hundred thousand miles on it, being driven daily, in town.
Wear and Tear is what leads to breakdowns.
- Too many trips on that old set of tires?
- Running cheap fuel for too long?
- Ever replaced those old headlights?
All these things can lead to major damage, more downtime and unhappy riders. That is why regular maintenance is important to keep in mind, especially when driving for Lyft. That's going to cost you. Even if you earn $1,000 driving, one large repair could wipe out those earnings.
Writing Off Repairs And Miles At Tax Time
The details are a bit boring, but you can write off a lot of your expenses when tax time rolls around. Depending on how much income you make, this could be very beneficial to you, or not much at all. According to Hurdlr, you can write off a ton of things related to your car, including insurance, gas, car washes, maintenance, license/title/registration, and whatever other related expenses there are. That sounds great! But it's not like you're “making” more money. You're just reducing the amount that the IRS can take from you. They're still taking money from your earnings.
PLUS, if you make over $400, you'll be subject to a self employment tax. And now your taxes are more complicated, so if you aren't paying someone to do it, you've got to figure out these calculations yourself. Or pay someone to do your taxes, which is going to cost you more at tax time. You can probably figure it out yourself, but remember you can't write off your whole car payment. There's a calculation you have to make to get the right number.
Then, at the end of the day, you're still putting wear and tear on your car, which is going to cost you in the long run. As full-on business, you're going to struggle to make a full time income in the long run.
Final Verdict On Making Money Driving For Lyft?
As a short term solution to make extra cash, or make money between jobs, driving for Lyft is great. As a long term solution for consistent income, I wouldn't recommend it. In fact, I'm not the only one.
Personally, I think the big money is not driving for Lyft, but in recruiting drivers and passengers. There are many opportunities to help Lyft grow their business, and they'll pay you to do it. Just through the app with a referral code you can get paid to refer new drivers or passengers.
A couple of the websites mentioned in this post are doing just that. The Ride Share Guy and Ryder Pearce, from SherpaShare are both, drivers and recruiters. Looking at their websites I’d say they spend more time recruiting than driving, as they each have hundreds of blog posts, podcasts and even videos.
What they are doing is called affiliate marketing, which the same thing I do, but my websites are on a different topic.
It's a highly profitable business model, where you start a website on a topic, then refer people to products and services related to the topic of your website. For example, related to ridesharing, drivers need all kinds of things: insurance, fuel and maintenance items, like tires and other parts. Other things like GPS devices, music subscriptions, and even health related items would also count.
If you started a website about ridesharing, you could potentially sell an ebook about how to stay in shape after sitting in your car all day, or what type of diet you can have to maintain energy throughout the day and not gain weight.
As an affiliate, you could earn a percentage each time visitors to your site buy something you promote or recommend. And the best part is, there is an affiliate program for most things you can buy online!
Your website can be on any topic though – computers, health, travel, family – any topic works because people buy so much online.
You can learn how to start your first affiliate website at the same training center I did. That links to a review, and yes, there's a referral code in the review so I get paid for each referral I get them.
Even if you still want to make money driving for Lyft, you can consider working on your affiliate site in your spare time. Waiting at Starbucks for an hour scrolling through Twitter or watching a movie isn't very productive. Imagine if you used that same time to build an online business. Even just a few hours per day can help you make major headway into earning reliable online income. It took me about 6 months to start earning money with my website, and I was able to quit my job after 18 months.
Two years may seem like a long time, but those two years of work has resulted in me working from home for a total of 4+ years now. It was worth every minute!
The cool thing about online business is that there's no “pressure” to go fast. You can work on your site Monday-Friday, then take weekends off, and your website will be ready for you on Monday! It's not like a brick and mortar business where you have to pay rent or hire employees. It's cheap to run, simple to learn, and fun because you can write about topics that interest you!
Got any questions? Leave message below?
Have you been driving for Lyft? What was your experience so far?