These days we constantly hear about markets being disrupted by new innovative entrepreneurs and ideas. Uber is one of those companies, and you have definitely heard about it in the news or from one of your friends by now.
You probably also hear about Uber's many controversies in the news, and just this year, Lyft drivers went on strike for higher pay? So can you really make money driving for Uber or is it just a hobby to make ends meet?
In this post I'm going to take a look at a few things related to earning money with this company including
- how to get started
- typical earnings of a driver per trip
- typical earnings of a driver per year
- amount of hours worked by most drivers
- ways to boost your earnings
- alternative companies to drive for
- how to make money with Uber without driving at all
Can You Make Money Driving for Uber?
You bet. Uber is always looking for more drivers. All you have to do is go to the website, complete an application and you’re in. The big question is how much money can you make. Could this be a full time job or just an income supplement, and how much?
First, let's look at the requirements to join Uber.
To drive for Uber you must have a valid driver’s license and a clean driving history. Your vehicle must be a 2006 model or newer, have four doors, and it must pass a vehicle inspection from your local garage, which you pay for.
The vehicle also has to fall into one of the four categories. The categories are as follows:
How Much Do Uber Drivers Make?
Payment is simple. You get paid 80% of each fare you accept. The price of the fare depends on the type of vehicle the rider chooses, and of course, the distance of the trip. UberX drivers will be paid the lowest fares, whereas UberBlack and UberSUV will be paid the highest.
It’s difficult to give you an exact possible income because the fares depend on your location as much as they depend on the type of car, distance of the trip, and even the time of day. A fare in New York City, for example, will be much different than a fare in Austin, Texas or SmallTown, USA.
However, the national average fare for Uber drivers is just over $13 per trip.
In New York the average is $29.34, but in Nashville it’s $10.14. As you can see, there’s a world of difference there.
All that to say, it’s definitely possible to make money driving for Uber. In fact, it's one of my top ways to make $500 fast because it's so flexible, and so widely available. You might have to grind in some cities, but you could probably bank $500 or more in just a week or two.
3 Pros of Being an Uber Driver
Because of the many variables, I can’t tell you how much you can earn. However, I can show you what I’ve learned about Uber, and how their drivers maximize their time to get the most profit. After that, you can decide if it’s worth your time to try your hand at Uber driving. Sound good?
Because of the way Uber is structured as a company, the potential is seemingly unlimited. Uber has made things, for better or worse, truly performance based. So if you want to get out there and really hustle, work smart and maximize your time, there’s a lot of potential to maximize your income with Uber.
Before we get into that let’s look at some of the basic variables.
With Uber, you are paid 80% of each fare you take. That fare can change depending on a few basic factors:
- Uber category (type of car)
- Distance of trip
- Day of the week
- Time of day
- Time of year
We have already discussed the first two factors, category and distance. But the last three also play a big role in how much you will be paid. Depending on when you work, you might be able to earn ten times as much as your regular fare — even more in some cases.
You see, Uber fares change with good ole’ supply and demand.
At times when demand is high, like say, Friday between 1am and 2am, Uber implements “surge pricing”. You can expect surge pricing to take place during normal high-demand hours, like rush hour, Friday and Saturday nights, local events and holidays.
But you can’t (and probably shouldn’t) depend on surge pricing. Users don’t like it and some drivers say they don’t like it, although I wouldn’t mind being the driver who picked up this fare.
That’s an image posted by Jessica Seinfeld (yep, Jerry Seinfeld’s wife) to her Instagram page. She was not happy about the surge pricing, obviously. There was another story about a college student that took a 15 minute ride home that cost over $300. She didn't notice the pricing because she was drunk, and then had to crowdfund her rent for the month.
Besides surge pricing, Uber drivers can maximize earnings by being smart about how they spend their time. One of the benefits to working with Uber is that you only work when you want.
When you start with Uber you are sent a package that contains a smartphone. This phone allows you to do things like track earnings, mileage, number of trips, etc. But it also has an app drivers use specifically to show when they are available to pick up riders and when they aren’t.
When you are ready to work you grab that phone, open the app and make yourself available. When you are ready to be off work, you simply show yourself as unavailable.
Say you have an errand to run in a busy part of town. It would make sense to show yourself as being available to riders. You get to take care of your errands and make a little money while you’re at it.
Uber drivers can attend family events, appointments and run errands anytime they want, all without the risk of losing a job.
This type of flexibility seems to be the Number One reason people choose to drive for Uber.
One of the better Uber policies is that you don’t need to sign a contract and work exclusively with Uber.
Ridesharing is blowing up and other companies like Lyft and Sidecar are in need of drivers too. Uber has no problem with you working with any of them. In fact, when I did my motorcycle trip across the US I relied on a few rideshare services to get around. In bigger cities, some drivers had two or three smartphones all working different services and they would get pinged all day and night.
So a smart driver could work for several rideshare companies at once to try an ensure the backseat is always full.
Ridesharing is so popular now, that even Craigslist has a category for it.
3. Earning More Money Whenever You Want
Another way Uber drivers earn more money is by recruiting new drivers and new riders. This is a fantastic way to earn a little extra cash.
For each new driver you recruit you get $100 once they complete their first ten trips.
You can attract new riders with a discount of $20 on their first ride and you get $5 for it. If you are an Uber driver you can use this to attract tons of new riders.
Not only do you get the fare money, but you get the extra $5 for each one. Not bad. I'm positive that the guy from therideshareguy.com makes a pretty penny off of referrals.
3 Cons of Being an Uber Driver
Despite all the Pros of driving for Uber there are some downsides.
Ridesharing is still a very new concept. Like all the disrupters before it, Uber is making waves with the traditional corporations and having to fight laws that were never intended for them.
So Uber is still on new ground, and it's hard to say what capacity the service will exist in after five or ten years. Some cities are banning the service! When I was in Reno I had to take a regular ‘ol dirty taxi because the city won't allow ridesharing services to operate. Let's hope this doesn't catch on.
Here are some things to think about before getting behind the wheel as an Uber driver.
The main red flag for me is the wear and tear on your car. I own a couple of rentals (houses), and all it takes is one major repair to wipe out a year's worth of income. You can write it off at tax time, but that's still cash you don't have any more.
1. Everyday Costs
The first thing to consider is the cost of gas. Lead-footed drivers, or drivers with larger vehicles in smaller Uber categories (UberX and UberXL) will find their profits take a major hit if they aren’t constantly focused on economical driving.
Then, of course, you have to think about insurance costs. Any business owner wants to minimize costs, but as an Uber driver, this might be dangerous. You are on the road much more than a normal driver, and therefore at greater risk for accidents.
But probably the most overlooked cost of driving for Uber is vehicle wear and tear. For every second your vehicle is running (even if it’s not moving) you are putting wear and tear on its components. Parts like belts, hoses, plugs and pulleys are all moving, even while the vehicle is stopped.
Once you start driving you have all that wear and tear, plus the tires and brakes, which are the most commonly replaced items on a vehicle.
And let’s not forget, the value of your vehicle drops lower and lower with each mile you drive. So when you go to sell your car or try to trade it in, those additional miles are going to drop the price of the car dramatically.
2. Startup Costs
Before you can put your car on the road and be available for Uber riders there are a few things you need to sort out first.
You have to pull your driving history for the last seven years. That will cost you about $50 to $75.
Then you will need a vehicle inspection. Luckily you can have this done at any local garage you choose, but you can expect a cost of $100. If there are any problems with the vehicle you will have to get those fixed before Uber will let you drive.
You will also need a weeks worth of gas. Uber pays weekly. That means you need to be sure you have enough gas to run for a full week without running out. This varies depending on location and vehicle type too, but we can budget $50 just to be safe. That’s two tanks of gas in a smaller car, less than one tank in a bigger SUV.
That puts your total starting costs at $200, and that’s a conservative number. It also assumes that you already have insurance, which could easily add another $200 to $300 for the down payment.
One thing Uber drivers complain about most is downtime. Some drivers say they sit for hours waiting for a user to request a ride. If you are hoping to boost your hourly wages while “available”, this downtime is going to affect that.
Bigger cities can be quite competitive, especially in the evenings and weekends when regular 9-5 people are doing Uber part time. In smaller cities there just aren't that many people looking for rides because more people own cars already due to a lack of public transportation (like my city)
In bigger cities that have had the service for a while, like New York, downtime occurs less often. When Uber comes to a new city, many people have never even heard of it. Those that do know about Uber might not realize that it’s available in their city yet.
Widespread adoption for new things like ridesharing, and specifically Uber, can take some time. New drivers in new cities feel these growing pains more than anyone else, and it shows in their weekly payouts.
If you are one of the new drivers in a city that has just adopted Uber then you can look forward to lots of downtime. In my small-ish town, there are only ever about 2-5 drivers on the map and sometimes I'll see the car in the same position for hours (probably waiting at home).
Full Time Or Part Time Income?
Both are possible! Yes, some people are earning a full time income being drivers for Uber (and similar rideshare services). The median income for a full time driver is somewhere between $30,000 – $60,000, with less than 2% making over $75,000 per year, and over 50% making less than $10,000 per year (remember, those people are driving less than 20 hours per week). Of course, that's just a lot of stats [source].
Basically, even if you are thinking about doing this full time, you need to test the waters first. Don't quit your job just yet because the main complaint I've read is that it's hard to get consistent work in many places.
Start on the weekends and in the evenings, and see how it goes. Boosting your current income a bit in your spare time seems to be what the majority of people are doing.
As you can see, there are a lot good things and bad things about driving for Uber. Yes, you can really make good money driving for Uber, but there are a lot of variables which can make this turn from a great gig, to a not-so-great one.
The biggest problem in my mind with it is that it’s active work, which means you are still trading hours for dollars. The best way to maximize your earnings with Uber is to work during the busiest times, which means you will sacrifice many nights, weekends and holidays with your family.
In my opinion, there is only one good way to make money with Uber, and that’s recruiting new drivers. It’s sort of like being an affiliate for Uber. Smart drivers are taking advantage of this everyday. Many of them have YouTube videos and share their special links on social media. However, few of them are taking full advantage of the opportunity.
You could setup a website in minutes and dominate this little niche. Eventually you could move into recruiting for other ridesharing companies too! This is basic affiliate marketing. Which is what I do! I can show you how to get started right here. Then you can be an affiliate for Uber or any company or product you like, including things like car care/maintenance products and other thing to enhance the rideshare experience.
This also gives you the advantage of working from home rather than on the road, meaning less time away from the house and an even more flexible schedule where you can create your own hours.