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11 Things to Know Before Becoming an Uber or Lyft Driver

Why the amount you'll take home is so hard to pin down


Part of the America’s Entrepreneurs Special Report

After an unfortunate confluence of circumstances that led to her being out of work due to a long illness, Carleen Nicholson, 65, of Dover, N.H., found herself needing extra income. Then her son committed suicide and Nicholson began isolating herself. Eventually, she knew she had to do something. So for “money and sanity,” Nicholson began driving for Uber, the nation’s largest on-demand ride-hailing service.

While the desire to earn money is an obvious reason to start driving for Uber, its archrival Lyft, or both — especially in retirement — there are other reasons. Keeping yourself occupied is a big one. Feeling useful is another, particularly for retirees. And, like Nicholson, you may want to get behind the wheel to interact with people. These may explain why more than half of Uber and Lyft drivers are 51 or over, according to a recent survey. Interestingly, more Uber drivers are over 50 than under 30; Uber has partnered with AARP to offer $35 sign-up bonuses to drivers older than 50.

But some words to the wise: The amount you’ll take home as an Uber or Lyft driver, after expenses, might be less than you think. Also, some people don’t have the temperament or disposition for this job. (For others, however, the work can be highly satisfying and lucrative.)

Here are 11 things to know before signing up to become an Uber or Lyft driver:

Both Lyft and Uber provide up to $1 million in liability and uninsured motorist coverage if anything happens when you’re in “driver mode.”

1. Your actual earnings may be less than advertised. Although an Uber study in early 2015 said its drivers in 20 cities averaged more than $19 an hour, a Buzzfeed survey found Uber drivers in Denver, Detroit and Houston earned less than $13.25 an hour after expenses in late 2015. In Detroit, they brought home just $8.77 an hour, on average.

A 2016 NerdWallet study of 14 of the largest Uber and Lyft markets found that in order to achieve an annual income of $50,000, Uber drivers must provide 60 rides a week, on average, and Lyft drivers need to offer 84 rides. On average, NerdWallet found, drivers around the country make more per trip with Uber than with Lyft.

Exactly how much you’ll make depends largely, of course, on how many hours you put in behind the wheel. Uber says 80 percent of its “partners” drive fewer than 35 hours a week in its 20 largest markets; more than half drive one to 14 hours.

But regardless of how much you’ll work, be sure to take into account the expenses you’ll incur — maintenance, gasoline, repairs, insurance and taxes — and the commission Uber or Lyft will take. Uber keeps 25 percent of drivers’ fares; Lyft takes 20 to 25 percent. (In its Uber analysis, Buzzfeed assumed driver expenses equaled 25 percent of their gross pay.)

As an independent contractor and not an employee, you’re responsible for most of your auto expenses — including both the employer’s and employee’s half of federal self-employment taxes. Both Lyft and Uber, however, provide up to $1 million in liability and uninsured motorist coverage if anything happens when you’re in “driver mode.”

2. It may pay to drive for both Uber and Lyft. Many drivers do because they find that sometimes one service offers better rates than the other. The New York Times recently wrote that Lyft had “cultivated a reputation for being more driver-friendly” than Uber.

3. You’ll want to be familiar with “peak” hours where you live. That’s when you’ll earn the most per hour, because Uber and Lyft raise their rates for customers then. Uber calls this “surge pricing.” Lyft calls it Prime Time. Typically, peak hours tend to be late at night or early in the morning — sometimes very late at night or very early in the morning — especially during concerts, sporting events, festivals, conventions, trade shows and such.

Late-night passengers needing to get home from bars present of a higher risk of getting sick in your car, however. Uber and Lyft will help cover your cost of getting the car cleaned if that happens.

4. Being an Uber or Lyft driver probably won’t be lucrative enough to represent your main source of income. Consider it supplementary, especially if you live in a smaller market, can’t spend all day in the car or can’t drive at “peak” hours every day.

5. Finding a local Facebook group for Uber and Lyft drivers can help you make more money. If there is such a group, you can get a lot of good information about where and when to earn the most as a driver.

6. It pays to know your area. Rod Bustos, 52, of Augusta, Ga., drove for Uber for a year and said it really only paid off for him during Augusta’s Masters golf tournament and the Augusta Beer Festival.

If you live in a small city or in a rural area, don’t expect a lot of business except during events like festivals and such.

7. Make sure you can endure the rigors of the job. Said Sandra Lutz-Rodriguez, 52, of Portland, Ore., who drives for Uber and Lyft (and says Uber keeps her busier): “Prolonged sitting can, and will, be hard for some.” Anyone who’s gotten out of the driver’s seat after a long road trip knows all about the stiffness in the legs and back that comes with that.

8. Plan to keep your car clean, inside and out, at all times. This could mean weekly detailing and daily trips to the car wash.

9. The work-life balance onus is on you. Being an Uber or Lyft driver allows for a lot of flexibility, since you make your own hours. That also means that avoiding exhaustion and staying healthy is up to you.

10. Lyft builds customers’ tips into its app; Uber generally does not. But Uber customers can tip drivers in cash; its customers must pay for rides with a credit card. New York City officials just proposed rules to require tipping as an option and California’s legislature is considering a similar law.

11. Finally, don’t become an Uber or Lyft driver if you’re not a “people person.” Passengers rate their experience with their drivers, so if you come off as dour or angry, this could negatively affect your rating. That, in turn, can determine whether you’ll get the call to pick someone up. My niece, who uses Uber all the time, only calls for drivers with perfect ratings. She’s not the only one.

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By Stephen L. Antczak
Stephen L. Antczak is a freelance writer,  specializing in articles about money, work, volunteering, education and aging. He blogs about going back to college as an adult at The 'Old' College Try.

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