If you’re looking for a new job or a part-time side hustle, it’s hard to ignore those sign-on bonuses that Lyft offers to bring in new drivers.
So it’s no surprise that more and more people are finding employment in the gig-economy as drivers for Lyft.
But do Lyft drivers make as much as those ads promise?
The opportunity to create your own schedule and work on your own time frame is very appealing.
And those sign-on driver bonuses are definitely worth it for the extra money, so we highly recommend using a referral code.
But there are other things you need to consider in order to determine if you will be able to earn the income you need.
In this post, we’re breaking down everything you need to know about earning money as a driver for Lyft.
From the expenses you’ll have to pay to maintain your car to the average hourly salary you can expect to make, there’s a lot to learn.
Don’t just sign up, jump in your car, and start driving.
Take the time to do some research so you know exactly what you can expect before you get in too deep.
To calculate Lyft driver pay, you have to take into account how Lyft pays and what expenses you are responsible for.
Contents
Calculating Lyft Driver Earnings
Lyft (and similar services) do not pay their drivers a salary or an hourly wage.
You’re pretty much your own boss, and you work as an independent contractor.
That comes with a great deal of freedom, but it offers no guarantee of any earnings whatsoever.
Drivers get paid a percentage of every fare when passengers pay for a ride.
Drivers also have the potential to earn tips, which they keep for themselves and do not have to share with Lyft.
Lyft reports that the national hourly wage is $18.83 per hour, yet third-party studies show that Lyft drivers earn an average of roughly $17.50 per hour.
But that is gross income, not net income.
That doesn’t account for any of the expenses that drivers need to cover.
It’s interesting to note that while some studies show Uber earnings are higher, they also show that Lyft drivers earn more in tips.
And tips can make a big difference in your total overall income.
Drivers only make money for the rides they give – they don’t earn anything while they’re waiting for riders to request a car.
So there can be a considerable amount of downtime throughout an average workday.
Lyft breaks the time down into three periods.
- In period 1, the driver signs into the Lyft app and the driver makes no money.
- In period 2, the driver accepts the ride request and makes their way to the pickup.
- Period 3 relates to the time in which there is a passenger in the car.
According to Lyft, the national average for all periods 1 through 3 breaks down to $18.83 per hour.
That may be higher than the minimum wage, yet it doesn’t factor in the driver’s expenses.
(We’ll get more into that below).
So how do drivers get paid?
Every ride fare includes the base fare, cost per mile, and cost per minute.
Drivers are paid for the miles and time they drive, and Lyft takes a commission and a percentage of every successful ride.
The more you drive, the more you’ll make, but Lyft will collect their fees and percentages regardless of how much or how little you drive.
In densely populated cities such as New York and Los Angeles, drivers can make as much as $35 per hour, but when you calculate the expenses, it’s much less.
For a better idea of how to calculate your potential income, check out this Lyft income calculator.
Calculating Lyft Driver Expenses
The money you get paid from Lyft is not all profit.
Every driver has a series of expenses they have to incur, so you’ll need to deduct those expenses from your earnings to determine your hourly wage.
So what are all the expenses that drivers need to be aware of?
There are several…
The first and most obvious expense is the car itself.
Most drivers have a lease payment or a car loan that they have to pay every month.
Of course, this varies depending on the make, model, and year of the car, but it’s a major expense that you cannot overlook.
The second expense is car insurance.
This also varies depending on your car, but the more you drive, the more important it is to have good coverage on your vehicle.
Your monthly insurance payments can eat up a sizable chunk of your earnings.
And don’t forget about gas.
Drivers always have to pay for their own gas – and there is never any reimbursement for that.
But the biggest expense of all might be the cost of vehicle maintenance.
Drivers are responsible for the upkeep of their vehicles and all maintenance needs.
From simple things like fluid changes and tire rotations to major maintenance jobs, these costs can take a real toll on your profits.
The more you drive, the more wear and tear you’re putting on your car.
And that inevitably comes with some level of required maintenance.
That wear and tear also reduces the value of your car.
When it comes time to sell it, the more miles you have on your engine, the less your vehicle will be worth.
These are all things that drivers need to take into account before deciding if it’s worth it to drive for Lyft or Uber or any other ridesharing service.
By taking a look at the mileage deduction set forth by the IRS you can figure out what your expenses will be.
In 2019, the IRS deduction for mileage is 54 1/2 cents per mile.
So every two miles you drive costs you $1.09.
Every ten miles costs you $5.45.
Keep in mind, the IRS mileage deduction is only an average, and it’s safe to say it’s a low estimation.
But this deduction accounts for everything from car maintenance and repairs to gas and insurance, so it’s a good gauge.
Calculating Your Hourly Rate
Once you know how much you made in an hour and how much your expenses are per hour, you can calculate your actual hourly rate.
- First, total up your expenses (.545 x the number of miles you drove).
- Subtract your total expenses from your total income.
- Divide that total by the number of hours you worked.
For example, let’s say you drove 100 miles in a week.
You made $500 and you worked for 25 hours.
Here’s how this equation would look:
- Expenses = (.545 x 100) = $54.50
- $500 – $54.50 = $445.50
- $445.50/25 hours = $17.82 an hour
You’ll find a much different and much lower number than if you simply look at your Lyft earnings and divide that by the number of hours you were on the road.
Don’t want to wait until the end of the week to calculate your profits?
You can calculate it per ride.
Multiply .545 by the total miles on the ride.
Subtract that figure from the amount of money Lyft paid you for that ride.
That is your actual profit for that ride.
If you’re debating if you should drive for Uber or Lyft, keep in mind that Lyft takes a smaller commission.
That little bit can help you enjoy a higher average hourly rate – and every little bit counts!
How Much Lyft Drivers Actually Make
Now that you know how to calculate your earnings, expenses, and hourly profit, let’s get to the real question: how much do Lyft drivers make?
The short answer is that it varies quite a bit from city to city.
Here’s one example from a driver in Los Angeles, which happens to be one of the highest earning markets in the country:
A part-time driver in LA reported earning $325.68 from 40 rides, totaling just over 19 hours of work.
He also made $31 in tips plus a small bonus, for a total of approximately $361.
Averaged out between the 40 rides, that’s about $9 per ride.
Averaged out between 19 hours, he made approximately $19 per hour.
Keep in mind, this driver is in Los Angeles, one of the best markets for ridesharing services.
$19 per hour is well above the minimum wage, but when we subtract his expenses, it’s less.
Of the 40 rides he did, one ride was 13.85 miles and took just over one hour (LA traffic can be a nightmare).
After Lyft fees, he made $17.69 on this ride.
Not bad for an hour of rideshare driving, but if we use the 54 1/2 cent IRS mileage deduction to calculate his expenses, it cost him $7.55 to do this drive.
And that means the profit in that one hour was only $10.14.
To be fair to this driver, he did make more that week than we’re letting on.
And that’s because he took advantage of a Lyft bonus program where he was guaranteed $500 in earnings if he did 40 rides.
And he did.
His income totaled the $361 that we mentioned above, but Lyft made up the difference and paid him approximately $130 extra, just for doing 40 rides.
Had he done 40 rides and only made $200, they would have given him $300 extra.
Had he done 40 rides and made $450, they would have given him a $50 bonus.
It’s these sorts of bonus programs and referral programs that can really increase your hourly earnings.
Keep in mind, there are no expenses to deduct from the $130 bonus paid to this driver in this particular week.
So if we divide his $130 bonus by the 19 hours worked, he made an extra $6.84 per hour.
Add that to the $10.14 per hour ride we outlined earlier and all of a sudden his hourly earning jumps to nearly $17 an hour.
The point is, most drivers can’t rely on hourly earnings alone.
Depending on your market and how many hours you drive per week, we’ve seen rates as low as a few dollars per hour and as high as $31 per hour.
The trick is to drive at the right times and take advantage of bonuses, referral programs, and surge pricing to boost your income.
Is Driving for Lyft Worth It?
With smaller commissions to pay, Lyft drivers report higher earnings than those driving for Uber.
But that doesn’t mean that Lyft drivers are raking in the big bucks.
A recent study by lending company Earnest reports that the average wage for Lyft drivers is $377 per month; which is more than Uber that has an average pay of $364.
The median monthly income for Lyft is $210, while Uber is just $155.
Lyft riders also tend to tip more.
Drivers keep 100% of their tips, so those extra dollars go a long way in helping rideshare drivers to increase their hourly earnings and monthly income.
Idle time certainly takes its toll on your total earnings.
As a driver, you have to expect there will be times when you’re parked and waiting for ride requests to come in.
So even if you set out to work an eight hour day, you might spend much of that time sitting, checking your phone, and idling in your car.
And if you prefer to drive around town waiting for rides, you’ll only be putting more wear and tear on your vehicle.
It’s hard to predict what hours and which days will be busy.
But if you work during rush hours and weekend nights, there’s a good chance you’ll see more rides than you will on a Tuesday afternoon.
But every day is different and every market is different, so you have to know your market and know where the riders are.
You can make money driving with Lyft, but you have to be smart about it.
Don’t dive in with your eyes closed.
Calculate your potential earnings.
Have an understanding of your expenses.
Take advantage of bonuses and referral programs as much as possible.
You’re probably not going to get rich driving for Lyft (or Uber for that matter), but if you work hard, you can make it work for you.
