How Much Lyft Drivers Can Earn

Driving passengers with Lyft can be a source of decent income. But exactly how much? This is a constant topic of debate among gig drivers! Here we sketch out ways to calculate how much Lyft drivers earn in Canada.

Lyft pays drivers on a trip-by-trip basis. Each trip’s payment is a sum of 3 parts:

1. 1. Fare: The driver receives a ride fare which factors in a base rate + time + distance.
   2. Bonuses: Lyft sometimes offers drivers extra amounts (in real time or scheduled) for specific busy times & places – Personal Power Zones, Ride Streaks, Guarantees, and Ride Challenges.
   3. Tips: Many Lyft passengers do not tip. But when they do, Lyft passes on 100% to the driver.

So: Lyft pays its drivers Fare + Bonus(es) + Tip for each trip.

For convenience, drivers often use a quick method of measuring income in dollars per hour. This is computed by dividing the total amount paid by Lyft in a single day/week by the number of hours online (logged into the app).

Example:
(Day) Lyft pays me $135. I was online for 6.25 hours. So I “earned” $21.60/hour.
(Week) Lyft pays me $955. I was online for 47.5 hours. So I “earned” $20.11/hour.

True “Work-Hours”: In reality, some online time is often used for non-work activities (e.g. sitting reading email, doing a small errand, or posting in the Gig Café). In the above example (where I earned $135 on one day), let’s suppose I used about 30 minutes between rides for various other tasks. And I consumed another 30 minutes going to/from my regular starting location (the gig equivalent of commuting). So even though I was online for 6.25 hours, I was actually “working” for only 5.25 hours. We think this is a more realistic way to measure “work-hours”. In this case, I actually earned $25.71/hour.

Of course, this method oversimplifies the estimation of income. For one thing, it does not factor in expenses. Nevertheless, calculating average “income per hour” is a useful way to understand comparative earning rates.

To arrive at net (actual) income, I must subtract all gig-related expenses from my total Lyft income. These expenses fall into 4 general categories:

1. 1. Operational Expenses: Costs directly tied to my Lyft mileage. In other words, the more I drive, the more I pay. This is mainly fuel. (Remember, driving passengers involves a lot more kilometers than delivering meals or groceries.) I probably should allocate 15-20% of what Lyft pays me to cover fuel (unless I drive a hybrid!)
   2. Fixed “Overhead” Expenses: Costs which remain the same regardless of how many kilometers I drive (e.g. monthly data plan, annual vehicle registration, private car insurance).
   3. One-time Expenses: Costs such as purchase of a smartphone or a set of winter tires. Also, there will be car repairs along the way. And if I get a ticket (or even worse, have an accident), I must include this as a one-time expense.
   4. Depreciation: The more I drive my car, the less it is worth. I must be realistic about this significant hidden expense.

Business/Personal Balance. It is essential to analyze my car’s total kilometers, and determine what percentage is for gig driving and what percentage is for personal use. Assuming the balance is 50/50, then all amounts for fixed expenses, one-time expenses and depreciation should be reduced by 50% before subtracting them from my Lyft income.

One additional complication: Lyft collects GST/HST from passengers for each ride, and includes it in the total amount paid to the driver. This must eventually be turned over to the government – usually once a year. (For this purpose, each driver must obtain a business registration number from the CRA.)

For example, when Lyft pays $500 into my bank account, not all of it is mine to keep! Perhaps $460 is mine, and the other $40 is GST/HST which I owe Revenue Canada. (The tax percentage varies from province to province.)

(Something to remember: I don’t have to pay the government 100% of the GST/HST which I received from Lyft. There is a formula whereby I can keep a percentage of it, to offset the GST/HST on my business expenses.)

All of these computations may be a bit oversimplified. But if they are accurate for my situation, here is how I would calculate my actual hourly income (after covering all gig-related expenses):

• • I drive 20 work-hours/week x 50 weeks = 1,000 hours
  • My final net income (before paying income tax) = $16,150
  • My average income = $16.15/hour (BETTER THAN MINIMUM WAGE)

Of course, in every situation there may be some variables which increase/decrease this average hourly amount. Each driver must do their own calculations based on their own realities.

However, at Gig Drivers of Canada, we believe many Lyft drivers can earn MORE than $16.15/hour. As time goes by, you will gain experience and benefit from useful strategies in the Gigapedia and Gig Café, and your hourly income will increase.

Once you are confident Lyft may be a good fit for you, then you might as well go ahead and take the next step: SIGN UP! It only takes a few minutes to set up your Lyft Account, providing basic information to establish your driver profile.

Don’t worry – Lyft does not require fees or deposits, and there are no binding obligations or legal traps. At any point along the way, you can pause to get answers to your questions. But if you’re ready to move forward, the sooner you sign up and launch the registration process, the sooner you’ll be out on the road earning money.

(Note: When you click the link to go to Lyft’s sign-up page, the sign-up address will automatically include a Referral Code DOUG36244. This tells Lyft you were referred by Gig Drivers of Canada. We would be grateful if you will use that sign-up page (or enter the Referral Code in the sign-up box), so Gig Drivers can receive recognition and a small referral reward to help cover our expenses. Thank you very much!)