How Much Can You Make As an Uber Driver?

How Uber Calculates Payments

You may be wondering “How much does Uber pay?”but in order to find the answer to that question, you need to know the way Uber calculates payments.

Depending on the service, payments are calculated a little differently. More specifically, the amount you will end up earning depends on where you drive, how often you do it, and when you drive.

For Rides

For a ride, Uber will calculate depending on the booking fee, aka the fee paid by the rider to cover regulatory, safety, and operational costs, and the service fee, which funds payment processing, app development, and customer support. But there are other things taken into consideration when calculating the payments for rides.

For example, the surge is also taken into account. Surge basically allows you to look on the heat map, which shows you, as a driver, where people have the highest demand for Uber. This allows you to earn more cash apart from your standard fare. And the standard trip fare is taken into consideration as well, which amounts to how far you drive, as well as the amount of time that you drive. Another thing added to the calculations is the earn on long-distance pickups, on minimums for short trips and while waiting for riders. Also, if a rider will cancel a request, there will be a cancellation fee that you are going to receive.  

For Delivery

When it comes to delivery, you would earn money depending on your pickup and dropoff. How far you travel will also be something that influences the amount of cash you are going to receive. In addition to that, if there are traffic and time delays, they are going to be factored into your fare.

If you happen to work in areas where people order food, and at busy times too, then you are going to earn way more cash. Also, besides getting the standard amount of cash for pickup and distance, you are also going to earn money for every dropoff.

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How Much Do Uber Drivers Actually Make?

Uber’s pay structure factors in several variables: base fares, tips and other incentives. Calculating a realistic average is difficult. However, according to Salary.com, most Uber drivers earn about $15 to $22 per hour.

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Ways Uber Drivers Make Money

Now, let’s take a look at the different ways Uber drivers make money.

Fares

Uber drivers receive a base fare plus compensation for how long and far they’re driving. According to the Uber website, how much you make per mile or per hour varies by city. Fares can change over time, too. For example, in 2019, Uber dropped rates in Southern California from $0.80 per mile to $0.60 per mile. This led to protests and strikes in California.

Tips

Riders can tip their driver during or after their ride. Tips vary greatly, and most riders don’t tip. A 2019 study from the National Bureau of Economic Research found that only 1 percent of customers always tip and around 60 percent never tip. The average tip (of those who do tip) is $3. Female drivers are more likely to get tips than male drivers.

Ridester’s 2020 driver survey also found that tips added just $1.31 per hour to a driver’s earnings in 2020.

Bonuses & Promotions

Uber offers different bonuses throughout the year that enable drivers to earn extra money. An example bonus on the Uber website states, “earn $30 extra for completing 20 trips this week.”

Sometimes Uber runs driver sign-up promotions that give new drivers a $500 to $1000 bonus for signing up and completing 50 to 100 rides in their first month. Sign-up bonus availability depends on the time of year and where you plan to drive.

Cancellation Fees

Uber drivers must wait a certain amount of time for the rider to show up. If the time limit passes, an Uber driver can mark the rider as a no-show. In most cases, the driver gets a cancellation fee of around $5.

How Much Can You Actually Make on Uber?

You can make a median salary of $56,066 as a full-time driver for Uber in the United States, according to ZipRecruiter. Annual income could go as high as $130,000 or as low as $14,500, depending on several factors. Factors that affect median earnings include hourly wages, the type of Uber driving, and location. For example, Uber Eats drivers currently earn an average annual salary of about $40,176

The top three highest paying cities for Uber rideshare drivers at the time of writing are San Mateo, CA, Berkeley, CA, and Daly City, CA. Full-time Uber driver earnings in these cities include an average of $69,121, $66,778, and $66,592 yearly respectively. 

How Often Does Uber Pay You?

As an Uber driver, you may have irregular hours but don’t let that keep you from viewing the job as a stable income. Uber will provide you with a regular paycheck. As an Uber driver, you’re paid weekly on a regular schedule.

Fares are deposited directly into your bank account. Uber’s pay periods begin on Monday at 4 a.m. and end the following Monday at 3:59 a.m. Emails will be sent to you that link to your pay statement. Pay statements are also visible in your “partner dashboard,’” which you can google to find. Every Thursday, Uber will direct deposit your pay into your bank account. However, be sure to enter your bank information at vault.uber.com.

If this doesn’t sound fast enough to you, there’s another option. Uber offers instant pay to their drivers. This lets you transfer your pay whenever you need to. Instant pay can be used up to five times per day. However, you will need a debit card in order to access it. You can use your personal debit card for $.50 per cash out. Or you can also use an Uber debit card from GoBank for $0 per cash out. Each time you transfer money your weekly pay statement will say “instant payouts.”

However, when considering instant pay, you will need to look into your bank’s procedures. Certain banks will take a few business days to transfer your money. Some of these banks include:

  • H&R Block
  • First Citizens Bank
  • Amegy Bank of Texas
  • California Bank and Trust
  • First National Bank of Omaha
  • Webster Bank
  • Silicon Valley Bank
  • Northern Trust
  • Bank of New York Mellon

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Is Working on Uber Worth It?

Working on Uber is worth it if you want a flexible job that allows you to be your own boss. Uber driving does not require as much capital as other businesses. To drive for Uber, you do not need a university degree. Even if you don’t own a car, you can hire one from Uber for as little as $250 per week. You can eventually buy a car if you have a steady source of income. 

What are Some Common Expenses for Uber Drivers?

Vehicle Maintenance

When you drive for your job, you drive more miles than you otherwise would. You’ll need to change the oil, other fluids, and tires more frequently.

Car Payment

If you don’t already own your car outright, you will need to continue making lease or car loan payments. According to Experian, the average monthly payment for a new car loan is $568. The average monthly payment for a used car loan is $397.

Car Insurance

Uber drivers need to maintain comprehensive and collision coverage on their personal auto insurance. According to data from the National Association of Insurance Commissioners, collision coverage costs $363 per year on average, and comprehensive insurance costs $160 per year on average.

Uber has additional insurance coverage that protects your car should you get into an accident while on the clock. However, drivers must pay a $1,000 deductible before the coverage kicks in. Uber also has third-party liability insurance and uninsured/underinsured motorist bodily injury insurance for drivers. Learn more about Uber and insurance here.

Gas

Gas prices vary significantly, depending on where you live. Uber drivers must pay for the gas used to operate their Uber business. You can claim gas using the standard mileage deduction or by tracking actual gas expenses and deducting an exact figure for gas.

In-Car Amenities

Some Uber drivers choose to offer riders in-car amenities like mints, phone chargers to use, water bottles, tissues, hand sanitizer, etc. Amenities aren’t required, but some drivers claim amenities help boost their ratings.

You can claim in-car amenities as a business expense outside of the standard mileage deduction.

Instant Pay Fee

Uber pays drivers weekly, but if you want your earnings faster than that, you will need to sign up for Uber Instant Pay. With Instant Pay, drivers can withdraw their earnings using a debit card for $0.50 per transaction. To avoid the fee, drivers can open an Uber debit account through GoBank.

Not every bank processes withdrawals immediately, so although it’s called Instant Pay, it could still take a day or two until the money appears in your account.

Health Insurance

Currently, driving full-time for Uber doesn’t mean you get benefits like health insurance. Uber drivers need to secure their own health insurance if they don’t already have health insurance through a family member, partner, or employer.

This might change in the future. In the Spring of 2020, Uber announced plans to establish a health insurance policy for drivers. Uber would reportedly pay for health benefits on a sliding scale based on hours worked.

Other Benefits

Uber doesn’t give drivers matching contributions to a retirement plan, life insurance, dental insurance, vision insurance, or other benefits. If you want these benefits, you will need to purchase them for yourself as an independent contractor.

Uber’s Pay Structure

Uber’s pay structure is dynamic and flexible. It is calculated according to location, time of day and frequency of work. Pay may vary on a day-to-day basis.

Uber provides “earnings estimates” instead of a set wage to help drivers identify their likely profits. These should be viewed strictly as projections. They are based on what other drivers working the same hours in the same location earned over the previous month.

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Qualifying Earnings

Uber drivers earn from a combination of factors including customer tips and trip fares. Occasionally things like Quest promotions may lead to additional earnings.

What Is a Base Fare?

The base fare is the flat rate that a pick-up pays. Time and distance increase the trip fare.

Does Surge Pricing Affect Drivers?

Uber uses surge pricing when demand is high, increasing the costs of rides. Uber drivers can use a local map to find surge prices and time their availability. This can increase earnings.

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Cancellation Fees

Drivers are protected if a ride is canceled while they are en route to pick-up. They will receive a cancellation fee.

How Much Are Uber Driver Expenses?

We all know that maintaining, insuring and gassing up a car can be expensive. So, when you work for Uber, you may wonder how expenses like these are covered. To answer this question, they’re covered by you. Uber drivers are expected to cover their own car expenses fully. These expenses commonly include:

  • Car lease payments. You can lease a car from Uber but are responsible for the fees. You can also drive your own car and are responsible for any fees that come with that ownership.
  • Insurance. Age, location, vehicle type, coupled with a variety of other factors determine what you pay for insurance. Uber does offer drivers a commercial insurance policy. This policy is $1 million of coverage per incident.
  • Tolls, license and permit fees. These are all paid by you. However, your passengers will find themselves paying a surcharge when you encounter tolls on the road.
  • Maintenance. All maintenance fees are your responsibility. The one exception is when a customer damages your car. Uber will reimburse you in this situation.
  • Gasoline. You will need to pay for your own gas as an Uber driver. Don’t expect to be reimbursed.

These expenses all vary depending on the age of your car, mileage, amount of driving, and destinations you travel to. Also keep in mind that as an Uber driver you can claim a deduction for your vehicle expenses. There are two ways to claim this deduction.

  • Standard mileage rate. The IRS issues a standard mileage rate each year. For 2018, it is 54.5 cents per mile. If you drove 1,000 miles driving for Uber, your deduction would be $545.
  • Actual expense method. With this method, you track the actual cost of gas, repairs, car insurance, registration, licenses and depreciation or lease payments for the year, then multiply those expenses by the percentage of miles driven for business. For example, if your total automobile expenses were $5,000 in 2018 and you drove 10,000 miles for the year, 2,000 of which were for Uber, your deduction would be $1,000 (20% of $5,000).

You can also deduct business-related smartphone use, as well as water or snacks given to passengers. In addition, the cost of parking and tolls paid while driving for Uber can be deducted.

Recently, the Tax Cuts and Jobs Act created a special deduction for owners of pass-through businesses such as sole proprietorships, partnerships, LLCs and S corporations. If your Uber driving business qualifies, you may be able to deduct up to 20% of your business income from your taxes. There are several rules and thresholds to navigate, so talk to your tax advisor to determine how the pass-through deduction will apply to your situation.

How Much Can You Earn Driving for Uber? The Bottom

How Much Can You Earn Driving for Uber? The Bottom Line

How much do Uber drivers make? Working as an Uber driver can provide a steady revenue stream.

There are quite a few factors that will influence your daily earnings, and some of them are outside of your control.

Working in an urban area is probably the best way to enhance your earnings as an Uber driver.

But, by targeting opportunities to increase your profits, like working during surge pricing and high-volume periods, you can tilt the playing field to your advantage and earn more money for your time behind the wheel.

And remember, all Uber drivers set their own schedules and priorities.

So, for someone who wants to avoid the demands of an office-based or nine-to-five type job, the flexibility of an Uber schedule can be especially appealing.

If you are thinking about driving for Uber, sign up today and see what you can earn.

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