Is Driving for Uber Worth it? 6 Things to Know Before Jumping In

When I first heard about Uber a few years ago I remember thinking that it sounded like an awesome idea – a super millennial-friendly alternative to cabs that also helps people make more money on the side driving their own cars.

As you may or may not know, I'm all about making extra money. I think it's an essential part of accelerating your financial journey. You can save money all day long and limit your spending (and trust me… I've been there), but the reality is that you can only cut out so much. It's just math, right?

Ridesharing apps, like Uber and Lyft, have so far proved the test of time and now you can find rideshare companies in most major cities. I actually use Uber if my wife and I are going to a party or a sporting event (where I may or may not be enjoying some adult beverages). It's convenient, and the Uber drivers typically tell me that they enjoy driving for money in their spare time.

But, is driving for rideshare companies like Uber and Lyft really worth it?

Here's why I'm even talking about this: I want you to pick an awesome side hustle that actually helps you make a bunch of money. Over the past few years that I've been running M$M, I've definitely found that some side hustles are great, and others turn out to be more of a hassle than they are worth.

To help you understand what I’m talking about, here are a couple of points of reference:

• 5 Characteristics of a Great Side Hustle– This is from the Laptop Empires podcast, which is me and my buddy, Mike Yanda, talking about online businesses. We dive right into the question of what makes for a good side hustle.
• True Confessions – I Was a Side Hustle Skeptic– This article was written by my editor and focuses on her experience, explaining the difference between a side hustle and part-time job. Hint: It’s flexibility and how possible it is to go full time with your side hustle.

The rideshare appeal

As a consumer, rideshares have become a practical option for those of us who need a safe ride home, or as something besides a rental car while on vacation, etc. The prices are usually less or comparable to taxi services, and there is something cool about knowing you’re being driven by someone who might be side hustling as a rideshare driver.

As a driver, Uber and Lyft offer flexible schedules that you set yourself and pretty decent pay. What more could you want? Spoiler: You might want more than these companies offer.

Whenever I use a rideshare service, I try to ask the driver why they’ve gotten into it, and I typically hear something like “I wanted to make some extra money for [fill in the blank].”

I once talked to a guy who was an immigrant, here in the states driving for Uber to help his son pay for med school. The guy was already doing well financially and just wanted to help his son get through school without taking on too much student loan debt. He figured he had the time to drive for Uber, so why not give it a try.

I’d say that more often than not, the appeal of driving for a ridesharing company is a noble cause like that. These are the same type of people who might start any side hustle – they’ve got a need for extra cash and want something flexible.

But, as I’ve started digging into the realities of driving for these companies, I can’t help but ask whether or not it’s actually worth it? Or, how does it stack up to other side hustles out there?

Is driving for Uber worth it? 6 things to know before jumping in:

1. Understand what you’ll actually be earning

When you drive for a rideshare company, you are earning a portion of what a rider pays for the ride. And, it’s reported that Uber and Lyft take around 25% of each ride.

From Uber’s website, a driver in Houston, TX (where I live) can expect to earn $1,000 in their first 150 trips. Lyft’s website doesn’t seem to offer a clear breakdown like that, but I’m going to assume it’s pretty similar.

Now, whether or not that’s driving during peak hours is unclear, but you’ll also have to consider that there is going to be some amount of time when you’re just sitting around waiting for a ride request.

With recent changes to earnings, here are a few articles that explain what you can realistically expect to make with both Uber and Lyft in 2019:

• The Declining State of Lyft and Uber Bonuses in 2019 – The Rideshare Guy
• How Much Do Uber Drivers Really Make? Three Drivers Share the Math – CNBC
• Uber Just Admitted That Its Pay Policy Will Make Drivers Even More Unhappy – Money.com

2. The expenses might be higher than you expect

To understand what you’ll be earning and whether or not driving for Uber is worth it, or any other rideshare service, there are some costs you’ll need to factor into your earnings.

Here are the expenses you’ll need to consider as a rideshare driver:

• Wear and tear of your car.
• Insurance, and this isn’t normal insurance. You can read about this from the Rideshare Guy for more details.
• Gas.
• Cleaning supplies… gotta keep your ride looking fresh.
• And…

… Taxes. As a rideshare driver, you are considered an independent contractor, which is an important consideration at tax time. Again, the Rideshare Guy has a lot to say about taxes for rideshare drivers, and honestly, this website is an amazing resource for those currently driving and those who are interested.

3. You really need to know your area

I’d say that I primarily use rideshare companies when I’m traveling for work stuff. Believe it or not, I actually do get out of my house sometimes and do real business things from time to time.

Usually, rideshare drivers can offer insights and advice for where the best place for a burger is, the best new micro-brewery, etc. It almost feels like you have a built-in travel guide, which is really cool.

I bring this up because to be the best possible rideshare driver, the one earning five-star reviews, you will need to know the city you’re driving in. I think this is something consumers have come to expect.

That isn’t to say that you can’t successfully drive for a rideshare company as a recent transplant (see what I said about the immigrant driving for Uber to help his son pay for med school), but being familiar with your area will be an advantage. If you don’t know the area, then take some time to review local guides, talk to other drivers, etc.

4. Setting your own schedule is, well, complicated

Companies like Uber and Lyft sell new drivers on the ability to create their own schedule, which you can do. But, your greatest earning potential will come from driving during peak hours.

There are naturally going to be certain hours of the day when more people are needing rides and hours when fewer drivers are available. Put those times together and you have Uber’s surge pricing or Lyft’s Prime Time.

The highest paying hours typically are:

• Going to work morning hours, think out of town business people needing rides to and from their hotels.
• Early, early morning hours, you know, the hours of shame.
• Weekends.
• Holidays.
• Weekend evenings, like heading out to eat and to and from bars and venues.

Those peak hours are going to be important considerations when thinking about whether or not driving for Uber is worth it. It’s whether or not you’re able to drive those hours that will determine if you can make the most money.

5. Keeping your car clean is key

Getting in a messy car is gross. Getting in a smoker’s car is gross (not trying to be judgy, but I don't smoke and it's frustrating to smell like smoke when I don't want to). Getting in a car that looks like it recently took a group of preschoolers home from McDonald's would be a huge turnoff too.

And, because your rideshare car is likely going to be what you use for your IRL driving, it might get messy. But, consumers don’t like this stuff. I mean, do you?

Keeping your car clean might not be a huge downside to rideshare driving, but it will be an important time investment for keeping a five-star rating.

Also, what if you pick up a group of guys or ladies on their way home from a bachelor or bachelorette party and one of them pukes up Red Bull and vodka all over your backseat? That’s on you (sorta – the customer will be charged a cleaning fee…but you still have a stranger's vomit in your car which is never a good thing).

6. You’ll never really be your own boss

When I was researching this article I came across this question from Lyft: “Want to be your own boss?”

I’m not sure being a rideshare driver necessarily qualifies as being your own boss. You are an independent contractor who is side hustling with one of these companies. That means you’re subject to their terms, pricing, etc.

So, if you’re thinking about being a rideshare driver to be your own boss, think again.

There are so many other side hustle options that give you more control of your time and earnings, and that’s what actually makes a side hustle a good one. My favorite is running Facebook Ads for small businesses. If you’re interested in starting, my Facebook Side Hustle Course teaches you everything you need to know to start earning $1,000 a month in just a few hours a week, not the 40+ you’ll need to work as a rideshare driver.

My final word on being a rideshare driver, or is driving for Uber worth it as a side hustle?

With any side business, there will be a number of things to think about, not least your flexibility and earning potential.

So, will driving for Uber or Lyft earn you money? Yes.

Do they let you set your own hours? Yes.

But, are there lots of other factors to consider? Yes.

Even more important, are there better options? YES.

For real, legit side hustles to start this year, check out 7 Side Hustles You Can Actually Start in 2020.

 

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Posted in: Side Hustles