Can You Really Make Money With Uber?

If you are thinking about driving for cash, I’m sure that you have heard about Uber before. It’s an app-hailing network company that has changed the way people take public transport worldwide. This service is becoming increasingly popular in a lot of major cities, attracting people to sign up as drivers. However, can you really make money with Uber and is this the ideal job for you? Let’s find out.

The Uber Revenue Model Explained

Simply put, you earn by driving people to their destination and the fare is determined by Uber’s unique way of calculation;

• Base fare – This fare is automatically charged upon pick-up. It might or might not apply depending on what type of car you use and the area that you are driving within.
• Time – This fee is calculated based on how much time a passenger spends in the car for the entire trip.
• Distance – This refers to the mileage covered during the trip.
• Booking fee – Also known as Uber’s admin fee (you don’t get to keep this one).
• Surge – A numerical factor assigned to an area by Uber when rides are in high demand.

Say for example, you drive a very basic car and you are sending a passenger from point A to point B over 8 miles and 20 minutes during peak hours.

• Base fare – $0
• Time (rate = 20 cents/min) – 0.2 x 20 = $4
• Distance (rate = $2/miles) – 2 x 8 = $16
• Surge factor = 1.3

So, in this trip alone, the estimated earning is about ($4 + $16) x 1.3 = $26. But because Uber is a ride-sharing service model, you are actually getting $20.80 after they take a 20% commission cut. Generally, the bigger the numbers, the more money you’ll be able to make. Now let’s see if there are ways to increase those numbers and how they can affect you as a driver.

Base fare

Using bigger car models and operating in major cities contribute to your base fare. You can see the difference here between driving in New York City versus Miami.

While it’s nice to drive in bigger cars, keep in mind that they come with higher maintenance too. Fuel, gas, car wash, insurance and loan payments – all these will go up and the expenses are recurrent weekly, if not monthly. So if you are thinking of using upper model cars for your service, make sure you can meet the maintenance fee and still make the extra cash.

Time and Distance

Obviously, the more distance you travel, the more you’ll earn, but there’s a caveat to this. Uber pays for sending passengers, not for picking them up. That’s why most drivers would drive to strategic location, park there and wait for their call. It’s more fuel efficient that way than driving around town.

Another scenario might take you out of a hot spot for 30 miles and if you want to return to the same area later on, you have to travel at your own cost. Likewise, if the distance you drive is far from your home, you’ll have to pay more to get back at the end of the day.

Experienced drivers would advise that you plan strategically; drive around or towards a hot spot while you are working and aim for a direction towards your home when finishing the last pickup.

However, will these techniques work in your favor all the time? I am guessing not because there’s so much uncertainty governing a passenger’s time, location and traffic situation on a daily basis.

Surge

A surge is probably the most sought after factor for increasing your income as an Uber driver. Every city’s surge value is different, but they only last for a few hours, usually in the morning and evening rush hours.

When a surge initiates, more drivers will head towards the hot spot so there will be a lot more competition to pick up passengers. At this point, you want to make sure that you are ready (and nearby) to pick up your calls. It’s all about good timing and if you missed it, you just got to plan better the next time.

Other Factors That Contribute to the Equation

Dealing With People

Not all passengers are created equal. The nice ones are the ideal customers, but if you pick up the wrong one, you can end up with a nightmare. Drunk, over-demanding and people who pick on female drivers – you don’t want to be near these people, much less, in the same car with them.

But then again, you don’t get to choose your passengers. All you can is to give them poor ratings for their behaviors through the app system and hopefully, there’s no dealing with them anymore in the future.  

Knowing Your City

Everyone likes to reach their destination fast (at the most minimal fare) and not get stuck in traffic jams. So it helps to know the routes around the city/suburbs well even without a GPS. Reason being, if you rely too much on the app, you could end up with navigation malfunction.

What if your phone died off? What if you end up with a longer route when there’s a shorter option available? These are unpredictable situations that you need to play by ear and having the map in your mind is the most reliable tool out there.

Service and Ratings

At the end of each trip, you are rated for your service and that does not only includes punctuality, but also extra gesture such as offering water bottles during hot days, phone charger and candy for the kids. If you fancy providing such hospitality, then that’s great.

However, the rating system can be quite uncompromising. What if people rate you not for your driving, but for the lack of ‘the extras’ and give you a score of 4 instead of 5 stars? How do you dispute over that?

Most passengers aim for 5 star drivers because it gives them confidence and if your ratings is below average, you could easily be kicked out of the Uber system and out of a job. Do you have any control over these situations?

Very little I assumed.

Commission Cut

Now for the million dollar question. How much do you really make at the end of the day? In the example above, I showed how Uber takes a 20% cut, but to really feel the impact of this, you need to look at a bigger number.

Say you work really hard, driving up to 10 hours/day for 5 days and taking advantages of all the surge around your area. At the end of the week, your estimated earning is about $800. But after Uber takes their share, you are left with $640.

Now, I don’t know about you, but giving up $160 per week is a lot of money. What if I drive full time for 4 weeks earning that same amount? That would come up to be $640 in which, all goes to Uber, NOT me. Honestly, I could use that money for fuel, car maintenance and a bit of self pampering, but a contract is a contract and there’s nothing much you can do about that.

So, Is Uber Worthy of Your Time?

Uber is a legitimate company (some might disagree though) that has helped college students, retirees, stay at home mom – just to name a few – make some side income during their free time. However, as I’ve explained a minute ago, you need to work hard and smart at the same time.

Are you willing to sit behind the wheels 12 hours a day for one week, driving in and out of town? Are you willing to sacrifice family time to pick up strangers from the street? Do you have what it takes to become a 5 star driver? These are some questions to run through before you can expect to earn decently from Uber.

As for me, I much prefer investing my time on something that has recurring value such as an online business because it can continue to generate income while I am asleep. And that’s what this blog is doing for me right now.

If you want to know how I got involved, read more about my entrepreneurial journey here.

Have any thoughts or questions about this topic? Just leave them in the space below and I would be happy to respond.