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I was talking to a friend who is looking for a side hustle before he got another full-time job, and Uber driving came into the thought. So, is driving Uber worth it?
Uber driving or ridesharing is not a scam. You can really make some money driving Uber. However, the high running cost, minimal payout and reducing ride requests due to competition, make Uber driving less attractive, and it is just not worth the time and effort.
A brief introduction of ridesharing
The rise of rideshare is incredible. The concept of matching drivers of private vehicles to riders who are seeking taxi-like transportation is well accepted.
The biggest name in the rideshare industry is Uber. The word “Uber” is not just a brand, it represents all rideshare in general. At the time of writing, the main rideshare providers are Uber, DiDi, Lyft and Grab.
The low entry barrier opens up an easy and legitimate side hustle or employment opportunity for a lot of people.
In this article, for the ease of explanation, we focus on Uber. There is not too much different from other rideshare companies.
Oversupply of rideshare drivers
As mentioned in the introduction, it is relatively easy to become a rideshare driver. Though each rideshare company has its own requirements, in general, a valid driver’s license, a vehicle that fits the requirements, and clean criminal record are required for an application.
This brings up the first problem of ridesharing. There are oversupplies of drivers. There is literally a rideshare vehicle at every corner. This is good for riders, but as a driver, the increasing competition means longer waiting time in between rides.
High running cost for a minimal fare
In order to provide adequate service to riders, all rideshare vehicles need to meet specific requirements. Vehicle requirements vary in different cities, some accept older vehicles while some require newer ones.
There are two options for anyone who is thinking of becoming a rideshare driver. You can use your own vehicle if it meets the requirement or you can lease one.
The issue with leasing vehicle is the commitment. Long or short, leasing company requires you to commit to a certain lease period. With a vehicle leasing option, you immediately lost the flexibility of doing rideshare. You have to do enough driving in order to cover the cost of the lease which cost around $200-$400 weekly.
The general running cost for Uber drivers on private vehicles are as below:
- Vehicles depreciation -Clocking high mileage, greatly depreciate the resale value of your vehicle. Tip: If you are using your own vehicle to Ubering around the town, you can start forgetting about its resale value.
- Frequent than normal service is required– Uber vehicle requires more frequent service due to high mileage. In general, you will need to service your vehicle every 3 to 4 months instead of the usual annual maintenance service. This is one of the biggest ongoing expenditures.
- Accelerated vehicle wear and tear cycle – Sooner than you’d have expected, brake disc, brake pad, driving belt, and, etc, are required to be replaced. Unfortunately, these parts do not come cheap.
- Mobile data usage – You need to have access to the internet in order to accept ride requests. Though this is not significant compared to other costs, it is still one of the business expenditures.
- Frequent vehicle cleaning cost – There are times, especially if you choose to drive in the weekend evenings, it is highly likely that you will meet drunk riders. Vomits and rubbish are common. Though you can claim cleaning fee from the rideshare company, it is a hassle and sometimes, cleaning fee offered by rideshare company is too little for proper cleaning.
- Car insurance – When a vehicle is used for rideshare purpose, it is recognized as a commercial vehicle. Car insurance premium for commercial vehicle is higher than a private vehicle. This means more money out of your pocket.
- Fuel consumption– Last but not least, fuel cost plays a big part in your overall profitability as a rideshare driver. Dead km (distance drove when you were not paid for) or inefficient vehicle adds to the cost in this category, you are not compensated for it. Rideshare driver has to be smart enough to decide if it is worthwhile driving more than 5 km away to pick up a rider. The 5 km contributes to dead KM which is out of the driver’s pocket.
High commission, and unfair payout
Commission rates vary from different rideshare companies. For Australia’s case, Uber has the biggest market share. However, Uber also notoriously charges driver the highest commission 27.5%. Yes, you are paying 27.5% commission just to access to Uber driver app.
Think about this, Uber does not provide any employee benefit or welfare protection to driver partners, and yet it is charging 27.5% for every trip you make. This is something you need to think about when considering getting into rideshare gig.
It is important to understand that, drivers are treated as independent contractors to rideshare companies which are not covered by any employee benefits and protection.
Secondly, Uber introduced “Upfront pricing” which it sort of promises a fixed fare to the rider. Upfront pricing will only be reverted back to the usual time and distance based calculation if there is a significant change of the trip (which is a rare occurrence). As a result, there are times, in fact, quite often, drivers are not paid the full fare (full fare should be calculated according to the time spent and distance drove).
There are also times, you are paid slightly more due to the upfront pricing model. But how frequent, and by how much is at the mercy of Uber algorithm (or should I say ‘Uber God’? ).
Just like any customer-facing job, Uber driver faces different types of riders daily. It is no surprise that some riders are unreasonably demanding, rude, inconsiderate and in some rare case, violent. Here is another more recent story from a Uber driver.
Of course, there are a lot more lovely riders, you just need to be prepared for different situations you might encounter. Most of the experienced drivers will advise you to have a dash cam installed. This is to protect yourself from disputes with riders or worse case, as evidence for unfortunate events.
‘Riders first’ emphasis, put drivers at a disadvantage
If you are in the circle of rideshare drivers, very often you will hear about drivers being deactivated due to complaints from riders. As a matter of fact, there are indeed drivers being deactivated without proper, detailed explanation. Again, you are at the mercy of Uber God.
Driver deactivation is part of the quality control process, which is totally understandable. However, the process is poorly executed and making drivers feeling unfair, and mistreated.
In addition, when a driver is on the job, he is all by himself. Any complaint from rider will put the driver at the risk of deactivation if there is no evidence to defend himself.
Is driving Uber worth it? – Final thoughts
Can you really make money driving Uber? Yes, you can. But, the earning is so small and it is hard to justify your time and effort. On average, rideshare drivers in Australia are earning an hourly rate in the range of $16 to $19 after cost. To make the end needs, some drivers risk overworked and driving under fatigue condition. You can read more about that here.
If you are looking for a side hustle, there are many other options. Ridesharing is no longer as attractive and lucrative as it used to be. Personally, I do not recommend it as a side hustle.
Of course, every situation is different. You might be in between job, or having difficulty finding one immediately, rideshare driving is totally legit. You just have to be aware of the cost and details we have discussed in this article. Your goal should be getting out of this gig as soon as you can.
My Special Recommendation
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Instead of wasting another hour waiting for a potentially less than $10 fare, why not start building your own online business?
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Do you have experience as a rideshare driver and have something to share? Or do you have any question? Please feel free to leave your comment below.