There is no one answer to this question for everyone. There are many details that go into the equation. Here are some of the revenue factors:
- How many hours are you driving?
- When are you driving?
- How many rides per hour can you expect?
- What are the mileage and per minute rates for the service you are driving for?
- How often do you get surge pricing?
- How far is a typical ride?
And then there are the cost factors:
- How much does gas cost per mile?
- How many miles are you driving with no passengers?
- How much does your car insurance cost?
- How much does car maintenance cost?
- How much does your car depreciate per mile?
The point is there is no reason to drive unless you are making money. And the next point is that you can lose money driving. You can have more expenses than you have income. One driver posted on Facebook that they had 1 ride over a 12 hour period. While others are posting hundreds of dollars in a single day.
The important thing is that you know your numbers and put them down on paper. Here are my numbers to give you an idea of how this goes:
- How many hours are you driving? 28
- When are you driving? T-F 8pm-11pm Sat and Sun 11am-7pm
- How many rides per hour can you expect? Uber 2.5, Lyft 1.2
- What are the mileage and per minute rates for the service you are driving for? $1.10/mile and $0.15/minute x 75%
- How often do you get surge pricing? Not enough to significantly affect my numbers
- How far is a typical ride? 5 miles
5 miles/ride x 2.5 rides/hour x 28 hours/week x 50 weeks/year = 17,500 miles/year
I take 2 weeks off a year so it is 50. I tend to drive 1 mile per 2 minutes on average.
((17,500 miles/year x $1.10/mile) + (17,500 miles/year x $0.15/minute x 2 minutes/mile)) x 75% = $18,375/year
That is working 28 hours a week. Work more hours and I would make more money. It would likely be at a lower rate since hopefully I am already driving the best hours possible. But you never know. By expanding my hours I may find a gold mine I did not know existed.
That is my gross earnings. Now come the expenses:
- How much does gas cost per mile? $0.07/mile (I have a hybrid)
- How many miles are you driving with no passengers? About the same as I do with passengers
- How much does your car insurance cost? $150/month (including $20/month for rideshare insurance)
- How much does car maintenance cost? About $1200/year (including new tires, oil changes, car washes)
- How much does your car depreciate per mile? About $0.30/mile (I have a new car, not smart, $30K/100K miles)
Overall I expect to drive a total of 35,000 miles in a year (17,500 with passengers and 17,500 without). Here are the yearly costs:
- Gas: 35,000 miles x $0.07/mile = $2450/year
- Insurance: $150/month x 12 months = $1800/year
- Car Maintenance: $1200/year
- Car Depreciation: $0.30/mile x 35,000 miles = $10,500/year
Total cost: $15,950/year
The reality is that most drivers ignore the car depreciation. The smart ones take it into account and balance getting a good used car and not paying a lot for it. The lower the value, the less it depreciates. In my case, I am working 1400 hours this year for $2425. The side benefits are, I get to set my own hours and I get a brand new car to drive whenever I want that I did not have before.
By the way, I did not mention taxes because most people will drive enough miles they won’t have to pay much, if any, taxes. Those who are lucky enough to owe taxes are the ones who made a lot more money than I will. I expect those people are in New York, San Francisco, maybe Boston or are driving a higher rate option than UberX or standard Lyft.
I have a whole chapter on that in my book. You should get it.
An Alternative Job
You have to at least consider what you would make doing something else. The minimum wage in San Diego is $11.50/hour. If I work my 28 hours a week for 50 weeks a year, I would get $16,100. Plus I would not have the gas and car depreciation costs. I would have to pay more in taxes, but not a lot more. The scheduling could never be as flexible as driving is. And almost all minimum wage jobs require you to stand for long periods of time. I have bad knees so I couldn’t do most jobs. Pizza delivery would work as an alternative. Something to consider.
You have to put in your own numbers to see if they work. If you don’t care about your car depreciating and are willing to bleed the value out of it, maybe ignoring that makes sense. The important thing is to know your numbers. The worst thing would be if in two years your car dies and you have not saved enough for your next car.
Let me know if this makes sense.