You’ve likely seen the eye-catching ads that claim that drivers are making $25 per hour by driving for Uber.
These simple, yet memorable ads seem to promise the ultimate gig: drive your car whenever you want and make tons of money. Sounds too good to be true, right?
Seeing those ads got us thinking; is that really how much Uber drivers make?
In doing some research, we found a survey from Ridester that polled over 2,000 drivers. What better way to get accurate information than from Uber drivers themselves?
In this article, we’re taking a deep dive into how much Uber drivers really make. We’ll discuss how they calculate their earnings, how tips factor in, and what their expenses are.
There are different levels of Uber driving, which can make a big difference in earnings.
But for this article, we’re focusing mostly on UberX, which is the standard service that most drivers qualify for.
Keep reading to learn everything you need to know about how much money you can make by driving for Uber.
The Ridester 2018 Independent Driver Earnings Survey is an excellent source on how much Uber drivers are earning.
For this survey, drivers self-reported their earnings and total income and provided screenshots from Uber to back up their claims.
What the survey shows is rather remarkable.
So this begs the question, why do so many people continue to drive with Uber?
It’s worth pointing out that the national average hourly wages vary quite a bit per the type of Uber service provided. Here’s the breakdown of median hourly income for the various vehicle types:
- UberX drivers earn $13.70/hour
- UberXL and UberSELECT drivers earn $14.85/hour
- UberSUV and UberBlack drivers earn $25/hour
When it comes to tips, over 90% of UberX drivers reported receiving no tips or tips less than $5. With tips added in, the average hourly rate for an UberX driver is $14.73.
It comes as no surprise that where you drive also affects how much you can earn. San Francisco, Seattle, and Long Island, NY rank among the highest paying areas, with drivers averaging around $25 per hour.
Tampa, Houston, and Springfield, MO rank among the lowest paying cities with drivers averaging under $9 per hour.
Akron, OH is the city with the lowest hourly rate by far. Drivers are making just $4.94 per hour, which is substantially less than the minimum wage.
Related: Uber vs. Lyft: Which is the Better Rideshare Service?
In most cities, UberX drivers aren’t exactly raking in the big bucks either. The data shows that New York City might be the only city in the country where UberX drivers can expect to average over $20 per hour.
But if you’ve lived in, worked in, or visited Manhattan, you know that $20 doesn’t go very far.
Another interesting thing we learned from the Ridester survey is the way that riders tip. The reality is, most passengers don’t tip at all.
- 36% of drivers claim to receive no tips at all in an average night of driving
- 28% claim to receive less than $5
- Approximately 10% say they earn tips between $6 and $10
- 7% of drivers receive between $11 and $15 in tips each night
- Only 10% report earning more than $16 in tips in an average night
The results of the survey show another interesting thing: most Uber drivers are not satisfied with their earnings and based on the numbers above, this isn’t too surprising.
70% of all drivers gave Uber three or fewer stars (out of five) on income satisfaction. The average satisfaction rating by drivers is only 2.9 stars out of five. If Uber wants to retain their drivers and bring on more, they’re going to have to do a whole lot better.
So are drivers sticking around? On average, 46.4% of Uber drivers stay with the company for less than one year. 23.5% say they have driven for Uber for one year, 19.2% for two years and only 11% have stuck around for three years or more.
If you can make good tips and leverage the Uber referral program, you are likely to see higher earnings and better profits. Currently, Uber is offering hundreds of dollars in bonuses for drivers that refer other drivers.
Drivers can also earn an extra $5 per passenger for every new rider they bring to the rideshare service.
To sum it up, Uber earnings vary from city to city. New York drivers earn about $29.34 per hour, while Nashville drivers earn an hourly rate of $8.11.
To calculate what an Uber driver makes, you have to consider two things: how much a driver earns the expenses incurred by the driver.
The cost of the ride alone is not enough to calculate what you’re putting in your pocket.
So let’s break down what an Uber fare costs.
If you live in a city where you can hail a taxi, you’re used to the standard rate, or a base fee plus a specific rate per mile. Uber is similar, but riders also pay a booking fee and have to deal with surge pricing.
Every ride starts with a base fare. Then the passenger has to pay X amount per minute and X amount per mile. The longer the trip, or the worse the traffic is, the more the fare will be.
These rates vary from city to city.
When demand is high, and driver supply is low (also known as surge pricing), the total fare will be even higher. But that doesn’t mean the driver wins. Regardless of the total fare, Uber skims 20% right off the top.
We’ll use Chicago for this example, which will provide a realistic estimate of what you can expect to earn in a major metro area. The Chicago base fare is $1.70. The booking fee is $1.20. The cost per minute is $0.20. The cost per mile is $0.90.
Let’s say you’ve got a passenger going approximately 2.5 miles. The total fare will be around $14.
Uber takes their 20% cut, plus the booking fee, leaving the driver with about $10.24 for that ride.
Not bad for a 2.5-mile drive, but that doesn’t account for the other expenses that the driver incurs.
All that math giving you a headache? Check out this Uber driver income calculator from Ridester for more of the nitty-gritty details.
Don’t be fooled — the amount of money Uber pays you isn’t 100% profit going into your pocket.
Sure, you can deposit your earnings into your account and spend that money right away, but driving for Uber is like running your own business; the funds you bring in from your sales or services are your gross earnings.
To determine your actual profit, you need to deduct the cost of your expenses.
Uber drivers have quite a few expenses, and they’re more costly than most people think.
The first thing to consider is that to drive for Uber, you must have an eligible car. That means you need to have a costly piece of equipment (that you pay for) to do the job.
Most drivers have a car loan or have a car lease. Whether it costs you $150 or $450 to finance your car each month, you have to take that expense into account when determining your total earnings.
Insurance is also a factor that varies depending on the age, location, and type of car you drive.
But car payments and insurance costs aren’t the only factors. Uber drivers also have to pay for tolls, licensing fees, permit fees, and gas.
Drivers work as independent contractors, which means they aren’t reimbursed for gas or driving fees. However, riders do pay an added surcharge for tolls.
Regardless of vehicle fees and car loans, the most serious expense is often vehicle maintenance. Cars break down. Tires go flat. Fluids need changing. And regular maintenance is necessary to keep any vehicle running smoothly.
It’s these vehicle repair and maintenance expenses that can take a big chunk out of your profits.
Uber drivers tend to look at their immediate earnings as their income, but that’s not accurate. You have to account for your expenses and vehicle maintenance to have a more realistic snapshot of your earnings.
But since every car is different, how can you gauge what expenses you might have in the future?
For once, we can rely on the IRS to help us out. As of 2018, the IRS deduction for mileage is 54.5 cents per mile.
This means that if you drive your car for a traditional job, your employer will reimburse you 54.5 cents for every mile you drive on their behalf. So every two miles you drive costs $1.09.
It’s in the IRS’s best interest to keep this deduction as low as possible. In other words, this is a low estimation of what it will cost you for every mile you put on your car.
So, as a driver, how can you calculate all the expenses and vehicle fees? How do you figure out what your car costs you per day? Here are some stats to help you gauge your expenses:
If you have a medium-sized sedan, such as a Toyota Camry or a Honda Accord, and you drive 30,000 miles per year, your vehicle cost per hour is approximately $8.16.
So if you’re earning $20 per hour with Uber, you’re only profiting $11.84.
Do you drive a medium-sized SUV such as a Honda Pilot? Based on the same criteria listed above, your vehicle cost per hour is approximately $9.84. So if you earn $22 per hour driving your SUV, you’re only profiting $12.16 per hour.
Here’s the bottom line: you’ll never know what you’re earning as an Uber driver unless you know what it costs to drive, insure, and maintain your car.
Every business has overhead costs.
If you were to rent a store or lease office space, you would have to pay rent, electricity, water, and other expenses. So as a driver, think of your car as your office. Instead of paying rent and utilities you have to pay for gas, maintenance, insurance, and other related fees.
Once you know what you’re earning and what you’re spending to drive and maintain the vehicle, it’s easy to figure out your earnings.
The allure of Uber ads that claim you can earn $25 per hour doesn’t take your expenses into account.
Depending on the city you drive in, $25 per hour may or may not be possible. But deduct those expenses, and in most cases, you’ll find that you’re making less than (or close to) minimum wage.
Smart drivers can increase this amount by finding the cheapest gas available, only driving during profitable times, and using both Uber and Lyft at the same time.
But for the average driver, your earnings could be even lower.
It means that Uber drivers aren’t making as much as they think they are and aren’t making anywhere close to what Uber says they can make.
After you factor in expenses and hourly rates, which average about $8.80-$11 in most states, driving for Uber is similar to having a minimum wage job.
Considering the number of hours that drivers are working, these rates are low. Also, drivers have to pay for many of their expenses, including gas, insurance, and fees.
They also put wear and tear on their car by default.
Tips can make a big difference and referrals can put extra cash in your pocket, but that means you have to do more work.
Before you decide to drive for Uber or any other similar rideshare service, do your homework first.
If you have an understanding of your expenses, you can estimate how much money you can make, and then you can decide for yourself if it’s worth it or not.
For many people, it is a great part-time option.
But driving for Uber as your full-time job is only realistic in certain markets. Why highly recommend giving it a try.
Drive until you earn your sign-on bonus. Then calculate your hourly earnings. From there, you can make an informed decision.
Drive for Uber? We’d love to hear about your experience.