It’s an appealing pitch: drive passengers around in your own car and earn extra cash.
Rideshare giant Uber operates in hundreds of cities around the world, while Lyft is available in over 200 U.S. cities. Meanwhile, more niche rideshare apps like Shuddle, which offers safe rides for families, and Lift Hero, which aims to be an Uber for seniors, operate only in San Francisco.
But as competition between rideshare apps heats up and startups drop their rates, you might be wondering if you can actually make money as a driver, especially after you consider the cost of operating your vehicle.
As with cars, your mileage may vary based on your city, your car’s operating costs, how often you drive and other factors.
First, realize that fares and fee structures vary depending on the city and the product. Within the Uber universe, for instance, there’s UberX, UberXL, UberBLACK and other service options. According to an analysis from Princeton University released last year, UberX (the least expensive Uber option) drivers who drove between one to 15 hours per week averaged $16.89 per hour, while those who drove 35 to 49 hours per week averaged $18.31 per hour, not adjusted for expenses.
[See: 10 Unexpected Costs of Driving.]
However, while some cities Uber operates in offer promotions that guarantee a higher minimum hourly rate (not factoring in expenses) to drivers in that city, Uber maintains that viewing earnings in dollars per hour isn’t an ideal metric. “Since drivers earn fares by the trip, not by the hour, drivers can turn the app on when it fits around the rest of their lives, and can take rides here and there as they go about their day,” says Uber spokeswoman Jessica Santillo.
And while some people drive as their main source of income, often cobbling together fares from multiple rideshare apps based on demand, more than half of the UberX drivers in the Princeton survey drove fewer than 15 hours per week, putting them in the supplemental income camp.
Kevin Foote, an entrepreneur and part-time Uber driver in the Denver area, estimates that he grosses between $20 and $25 per hour, driving a few hours a day, with a pre-tax payout between $400 and $500 per week. “Given that I am doing this when I would typically be sitting around while my son finishes his hockey practice, it is a nice sum of money to supplement my income,” he says.
Here’s a look at top questions to consider before you sign up to be a rideshare driver.
1. Have I used this app as a passenger? If you’re considering driving for Uber, Lyft or another ride-sharing app, download the passenger app first so you can try it and see how it works, suggests Harry Campbell, founder of TheRideshareGuy.com, a blog that provides in-depth information to rideshare drivers. For instance, Uber passengers and drivers rate each other on a five-point scale at the end of every ride. “See if your driver is a 4.9-rated driver,” Campbell says. “Learn about what they’re doing well,” he adds. Some drivers provide mints and water to passengers, and those extras could garner bigger tips or help you build positive ratings when you’re starting out as a new driver.
[Read: How to Invest in the Sharing Economy.]
2. Do I feel safe driving around strangers? As a driver, you never know who will get into your car. Uber and Lyft drivers are often most in-demand on Friday and Saturday nights, and if you drive those hours, which you may not want as your first few rides, you’ll probably have to deal with a belligerent drunk or two at some point. “There’s a lot more to it than picking up passengers at point A and dropping them at point B,” Campbell says. For example, you might have to break up a fight, clean up vomit or console a sobbing passenger during those late-night drives.
Jaimi Zwerling-Jeffrey, a San Francisco resident, began driving for Shuddle last fall after using the service for her daughter and deciding she felt more comfortable transporting kids than adults. “I like that it’s providing a service to families,” she says. “It’s flexible, so I have time to be with my daughter, take an online business class and still make additional income that really helps out with our family,” she adds. She estimates that she drives about 30 hours per week — with fares distributed across her day as she’s available — and averages $700 to $750 per week.
3. What are the costs of operating my vehicle? Remember: Costs like gas, vehicle depreciation and maintenance come out of the driver’s pocket. However, if you’re driving an older car, depreciation may be less of an issue. Still, rideshare services want recent model cars, so depending on your state, they won’t allow a vehicle that’s too old. Also, Lyft and Uber have fuel discount programs to drivers who meet certain criteria.
The Internal Revenue Service also lets drivers deduct 54 cents per mile driven for business in 2016, down from 57.5 cents in 2015, which can help offset the taxable income created by driving for a rideshare app. The actual operating costs of your vehicle may be higher or lower depending on the age of your car and whether you drive a hybrid, a gas guzzler or something in between.
[Read: Should You Let Uber Help You Lease a Car?]
4. Have I considered insurance? Rideshare companies typically offer some insurance coverage to their drivers when they’re logged into the app and transporting passengers. But if, for instance, you’re involved in an accident while you’re logged in and waiting for a passenger, the insurance may only cover you as secondary insurance, meaning you must file a claim with your own auto insurance first. Also, keep in mind your own auto insurance may not cover you in this situation. Foote says he’s risk-averse, so he took out a supplemental insurance policy to cover himself just in case.
“There is money to be made but … in reality, the actual take-home or declared income is substantially less than the ‘earn up to $30 per hour’ that rideshare companies advertise in their recruitment materials,” Foote says.
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Can You Really Make Money as a Rideshare Driver? originally appeared on usnews.com
