The ride-sharing app Uber is part of the growing “share economy,” wherein individuals choose to operate on a peer-to-peer (P2P) basis, rather in a peer-to-business (P2B) fashion. Traditionally, when someone needs to call a car to get them somewhere, they will call a car that is owned and licensed by a taxi company. Taxi drivers don’t own the cars they drive; they borrow them from their employer.
The model of companies like Uber and Lyft offers a twist on this setup: rather than drivers renting or leasing a car that is not their own to transport passengers, they use their own vehicle. In so doing, they are “sharing” their vehicle with their customers, which is the ethos of the share economy. On the surface Uber looks like a simple proposition for would-be drivers: sign up for the service, get into your car, then start getting rides.
Uber only takes a small commission per ride (20 percent); based on how easy it sounds and how much money the drivers keep, would one be correct in assuming that Uber is a lucrative path for potential drivers? This How Much guide to using Uber will closely analyze how much Uber drivers make, and see if the sharing economy is a sustainable model or a new fad that will soon fade away.
How Uber Works
To understand the way Uber is used, it’s important to break it down into two sub-categories: how drivers use it, and how riders use it. Let’s take each in turn.
Signing up for Uber will take some time, but it is not an arduous process by any means. In order to qualify as an Uber driver, you need the following:
- Up-to-date car insurance
- A vehicle whose make is no earlier than 2001 that is in good working condition
- An unexpired driver’s license (you need this before you apply)
- One year of driving experience in the United States (three years if you are under 23)
- Four doors, with seats for four people excluding the driver (note that two of the four doors cannot be “jump doors,” or doors that require the front doors to be opened in order to open. All passengers should be able to open their doors independently.)
- An iPhone (5 or later) or Android (4 or later) smartphone
- Pass a background check initiated by Uber
These are the generic requirements for anyone who signs up for Uber. It is important to note that there are some city-specific requirements for Uber drivers; for example, in New York drivers need a TLC license and a commercial driving license, and in San Francisco drivers need a car seating six people, not including the driver. To ensure that you qualify for Uber, be sure to look up on the company’s website what the requirements are for your unique locale. There are also specific rules for the different modes of Uber, such as UberX, Uber Black Car, and Uber Select — more on these at this link.
To use Uber as a driver, you want to first make sure that your city is one of the 500+ that use Uber. You can still pre-emptively download the app if you know you will be going to a city with Uber even if your city doesn’t have Uber available, but it is good to know just how far Uber can go for you.
If you’re in a city where Uber drivers operate, open the smartphone app or this website on your computer. While you can use Uber from your desktop or laptop computer, the app is primarily designed for mobile use, as its purpose is to be able to call a car from anywhere, making portable smartphones the ideal device to facilitate Uber transactions.
Once you’ve opened the app, you will need to ensure a few things:
- Your Pickup Location and GPS Dot are at the Same Location: When you open the Uber app, you will see two markers near your current location: a black bar with a pin reading “Set Pickup Location” and a blue dot that is supposed to denote your current location. These two things are different such that if you want your car to pick you up at a location you’re not at presently, you can drop the “Set Pickup Location” at a different location than the Blue GPS locator dot. If, however, you want to be picked up right where you’re at, make sure “Set Pickup Location” is square on your GPS locator dot; you’ll also want to ensure that the locator dot is actually where you are presently.
- You Are Getting the Car You Need: If you just need to get from A to B as conveniently as possible, you won’t need to pay for Uber Black Car, a service wherein you’re picked up in a nice black car. In select cities, you can even use Uber Pool, which allows multiple drivers to share a single Uber and save money in the process. At the bottom of your Uber screen you will see all of Uber’s car options, which in major cities will include UberX, UberXL, UberPool, and Uber Black Car. Depending on which city you’re in, your options may be limited. For basic rides make sure you’re sticking to a cheap option like UberX or UberPool. Should you have a client to chauffeur or a date to impress, Black Car would be a suitable expense.
Once you’ve called your ride, the Uber app will notify you how far your driver is away. Once you’ve been picked up and dropped off, you can “rate” your Uber driver to let Uber know if anything went well or wrong.
How Much Do Uber Drivers Get Out of it All?
Many are quick to sing the virtues of Uber and other ride-sharing services like it. Jake Novak at CNBC argues that Uber is “making America better.” But like with any hyped company, there’s a natural degree of skepticism that comes into play. Can Uber be really that good? Does being an Uber driver actually pay that well?
There are some undeniable issues with Uber’s business model, like their stubborn refusal to admit they are a cab company despite all mounting evidence to the contrary. But it is true that if you commit yourself to being an Uber driver, you can take home some considerable coin. Not enough to live in gold-drenched, Trump-esque luxury, mind you, but a respectable living nonetheless.
Take this graphic, which details the amount Uber and Lyft drivers make per major US city:
Note that as of a recent city ordinance (2016), Uber and Lyft are no longer in Austin, Texas.
Uber drivers’ pay is based on how many trips they accept. This is inherent to Uber’s model of flexibility; it doesn’t require drivers to meet an amount of work hours per week. Your “hourly wage” as an Uber driver is contingent upon how frequently you make yourself available to drive.
Save for special versions of Uber like UberPool, which gives riders a pre-calculated rate for their fare, an Uber ride is priced based upon time and miles traveled. Added to those two variables is a one-dollar Rider Fee. In cases where there is high demand for cars but few drivers on the road, Uber will enact “surge pricing,” which adds a multiplier to the basic Uber fare in order to incentivize drivers to get on the road to meet demand.
The pricing for Uber rides based on time and miles is contingent upon the city where you are accessing Uber. San Francisco and Los Angeles are more expensive Uber markets (especially given the time you’ll spend waiting on traffic in the latter), but a smaller market city like Bakersfield, which is located between those two cities, will be cheaper. The website I Drive With Uber provides some helpful tips and tricks about using Uber, and it also gives information to those wondering what driving with Uber is like. One article gives an example of what is like to be paid for a ride as an Uber driver in Los Angeles:
One could try to make an hourly wage calculation based on this ride, but with Uber it is hard to assume all other things are equal. You might not get hailed for a ride after dropping someone off, or you may get a ride that is even more expensive than the one you just completed. Since you can never know who you’ll pick up as an Uber driver, you can’t make too many assumptions about how much you’ll make an hour. If you’re smart and choose to drive during the busiest hours of the day, then you can expect a steady amount of rides coming in, but you should not be quick to assume that.
That said, if you are smart in how you plan out your schedule as an Uber driver, you can take home a considerable amount of money for what amounts to a pretty straightforward job. There is no one answer to the question, “How much do Uber drivers make?”, because there are far too many variables to account for: auto insurance rates, cost of potential car repair, and above all else what market a driver is working in. There’s more money to be made in Los Angeles than there is a small-market city. With careful planning and close analysis of how much Uber pays its riders based on city, you can figure out if being an Uber driver is right for you. The company does promise total flexibility in making your schedule, but if after crunching the numbers you see that you won’t be bringing home enough bread to make the driving worth it, then you might have to change up your plans.