UberPOOL and Lyft Line are Less Money for the Drivers

The companies claim that carrying more passengers means more money for the drivers. They are lying. They don’t pay the drivers more when they have more passengers. It is obvious when you do the math.

Let’s say you pick up 2 people at the airport, both requesting UberPOOL, and taking them to the same hotel. You now get paid at the UberPOOL mileage and minute rate that is 10% less than the UberX rate. And any overlapping miles, you get paid for once even though you have 2 paying passengers. Let’s do the math (using San Diego rates):

Uber gets: ((5 miles x $1.00/mile) + (10 minutes * $0.13/minute)) x 2 = $12.60

Driver gets: ((5 miles x $1.00/mile) + (10 minutes * $0.13/minute)) x 75% = $4.73

The driver gets 38% in this case and the company gets 62%. Why is it so bad? Because mileage is where drivers get a majority of their pay. So by reducing the mileage, drivers get less. The passenger pays 10% less and the company gets more. The only loser is the driver.

Let’s do the math on the same drive for UberX just to twist the knife a little:

Uber gets: ((5 miles x $1.10/mile) + (10 minutes * $0.15/minute)) x 2 = $16.00

Drivers get: ((5 miles x $1.10/mile) + (10 minutes * $0.15/minute)) x 2 x 75% = $12.00

For the UberPOOL ride, Uber pockets $12.60 – $4.73 = $7.87. For the UberX 2 separate rides, Uber pockets $16.00 – $12.00 = $4.00. They have figured out a way for the drivers to do more work and make less money while the company makes more money.

And in case you think I found the one case where this happens, let me assure you, this always happens. There is no case where it is better financially for the driver to take UberPOOL than UberX. Overall I have been calculating that I get about 40% of the money when driving for POOL. After doing the math it makes complete sense.

The math and the case is exactly the same for Lyft Line:

This does not say that you should not take UberPOOL or Lyft Line rides. Just realize that you are getting less per mile and less per minute no matter what they claim and they are getting more. A lot more. The above case shows how I was paid less for taking 2 people on Line than I would have been paid for 1 on regular Lyft.

So the passenger pays less, the company gets more, who is losing? That would be the driver. As in you.

Do I pick up POOL and Line passengers? If I am concerned about my acceptance rate, yes. If not, no. It is amazing how my rating almost always goes down on days I pick up POOL and Line passengers. A double whammy for sure.

Should you? That is your call. Now you know the math.

Drive smarter!

Explaining the Pay Confusion

There are things the companies say that have a lot of people confused. Smart people. Why? Because they use language to make things look better than they are.

What you get paid

The basic line from Uber and Lyft is that you get 75% of what they charge the passenger. That is not true. The companies set a fixed price before the passenger agrees to get picked up. You get paid based on what you actually did. For instance, let’s say they billed the passenger for 5 miles and 10 minutes. But you know a shortcut that means you drop them off in 4 miles and 8 minutes. You get 75% of the fee that would be charged for what you actually did. They charge the passenger for the anticipated fixed fee. The company keeps the difference.

And UberPOOL and Lyft Line pay more like 40%. More on that soon.

Guarantee vs Bonus

Lyft uses guarantees a lot. An offer will go something like “Your ticket to $220. It’s a go, John. Drive knowing you’re getting a guaranteed $220 in two easy steps.” A guarantee is a minimum that you will earn if you meet their criterion. Subtract from the $220 all the money you earn and all the TIPS you earn as well. If those add up to more than the $220, you get nothing. And btw, you only get 75% of the $220, so really $165.

A bonus is on top of whatever else you earn. Drivers used to get a bonus for signing up after driving a certain number of rides. Now both Lyft and Uber tend to use guarantees instead of bonuses for new drivers

NOTE: Lyft specifically talks about earnings all the time and not your take home. Uber is better at talking about take home. Earnings is a fake number to fool your head. Even I, the math loving guy, get confused at times.

How much can you make?

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.

Other Income

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.

Bottom Line

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.