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Costs and Earnings: The Real World of Rideshare

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DrivingForDollars
12 Rider Driver
 Posted 1 month ago

I think this applies to all markets though certainly the actual numbers are going to vary based on region. In Los Angeles, gas is often over $4 a gallon, and insurance rates are among the highest in the nation.

Nevertheless, there are some sobering realities. Among them that you need a car that is mostly depreciated, and you need to keep costs as low as possible which means doing all your own work. And most important of all is kepping your deadmiles (unpaid miles, such as going to pick up a passenger) to an absolutely minimum.

Nothing kills your profits more than deadmiles, not to mention using a new car.

I see drivers driving new Dogde chargers, and guess what? they are losing about 30 cents for every miles they drive Uber. I talk to driver who don't get itthat they ust can;'t be "driving around" without being paid for those miles. And when you get a really long ride, you might think that's great — but if you deadmile all the way back? Then you are making close to ZERO.


THE MATH, BROKEN DOWN AND MADE EASY

Car should be 10 years old at purchase — $10K max, even that is a bit high. $8K I think is a sweet spot.

Should be hybrid — I have a Camry Hybrid. 30mpg+ is the goal. IF you have a non-hybrid that does that well in city traffic, that's okay. But 30mpg is really a minimum.

Do your own work. "YourDream Garage" in Baldwin Hills has lifts you can rent fo $25/hour with all the tools you need. Pay for the VIP in advance ($250) as it gives a number of discounts and free hours.

Maintenance costs are hard to estimate, who knows what can go wrong? But I'll tell you this: if you have a Toyota Hybrid, expect to be doing total rea...

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I think this applies to all markets though certainly the actual numbers are going to vary based on region. In Los Angeles, gas is often over $4 a gallon, and insurance rates are among the highest in the nation.

Nevertheless, there are some sobering realities. Among them that you need a car that is mostly depreciated, and you need to keep costs as low as possible which means doing all your own work. And most important of all is kepping your deadmiles (unpaid miles, such as going to pick up a passenger) to an absolutely minimum.

Nothing kills your profits more than deadmiles, not to mention using a new car.

I see drivers driving new Dogde chargers, and guess what? they are losing about 30 cents for every miles they drive Uber. I talk to driver who don't get itthat they ust can;'t be "driving around" without being paid for those miles. And when you get a really long ride, you might think that's great — but if you deadmile all the way back? Then you are making close to ZERO.


THE MATH, BROKEN DOWN AND MADE EASY

Car should be 10 years old at purchase — $10K max, even that is a bit high. $8K I think is a sweet spot.

Should be hybrid — I have a Camry Hybrid. 30mpg+ is the goal. IF you have a non-hybrid that does that well in city traffic, that's okay. But 30mpg is really a minimum.

Do your own work. "YourDream Garage" in Baldwin Hills has lifts you can rent fo $25/hour with all the tools you need. Pay for the VIP in advance ($250) as it gives a number of discounts and free hours.

Maintenance costs are hard to estimate, who knows what can go wrong? But I'll tell you this: if you have a Toyota Hybrid, expect to be doing total rear brake replacements more often than you expect, including the calipers. At Autozone, I got pads, rotors, calipers for the rears total parts cost about $450, and two hours at YDG so total was about $500 doing it myself. If you go to Midas or some other rip off joint it's gonna be $1000.  This is the SECOND TIME I've done the brakes in 55K miles, but first time I've done the calipers. First job was pads and rotors only.

Tires: Costco and wait for the sale on Michelins AND the Costco free install sale (happens for a month just twice a year I think).

Insurance: Statefarm has a good rideshare add on. But Mercury is cheaper. Nevertheless, Statefarm is aggressive in defending you in subrogation when you get hit. And you WILL get hit.

Oh yea, own a daskcam. $85 for Viofo A119. Get it and thank me later. A dash cam is not optional, seriously — you'll need it when a cop hassles you illegally as well.


BASIC MATH

Assuming: 

  • a 10K car with 80K miles,
  • Gas @3.90, 30mpg,
  • self maintenance
  • Good insurance with rideshare
  • Car wash twice a month
  • driving 25K miles a year:

PER MILE:

Depreciation: .08
Gas: .13
Oil: .012
Tires: .01
Maintenance: .018
Car Washes: .01
Insurance: .11

TOTAL: 37 cents a mile.

Selling my soul to Uber: Priceless.

This last line is not a joke. Because my above costs, and everyone else's you read here, is missing the most important thing OUR TIME. 

It is 37 cents a mile PLUS my time. If you want to say your time is only running when you are driving and you average 3 minutes per mile, and minimum wage in LA is 14.25 an hour, then that is nearly 72 cents a mile.

Thus your actual average operating cost per mile to BREAK EVEN with you making minimum wage is

$1.09 a mile

Uber pays $1.23 a mile for a 3 minute mile. Assuming that you can keep your deadmiles down to 0.5 deadmiles for every paid mile (which is actually pretty hard to do), then your actualized per mile pay from Uber is $0.82 a mile. 

That's $9 an hour folks. Welcome to the gig economy.

-------------------

The Practical Reality

I have talked to enough drivers to know they don't get the deadmile issue, and they have deadmile ratios of 1:1 and as should be obvious, they are making about a third of minimum wage. LOL.

To exactly make minimum wage, your deadmile ratio needs to be 0.12:1 or put another way: 

If it is 1 mile to pick up the passenger, then that ride must be at least 9 miles.

If you aren't making that minuscule deadmile ratio, then you are making less than minimum wage.

This is not a job. This is being assaulted by corporate greed. And still Uber is losing billions a year - they lost 7.6 BILLION last year.

$7,600,000,000.00 — how do you lose that? Every year???  

Like "hey honey, where did ai put that 7.6 billion? was it in the mattress?"

It's not sustainable, and these companies are going to go away if they don't realize that they can't keep treating people this way. They are relying on people not being able to do math, but even so the attrition rate for 6 months is 97%.. after 6 months, 31 out of 32 drivers QUIT. Gosh wonder why?


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