How Much Uber Rideshare Drivers Can Earn

Driving passengers with Uber 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 Uber drivers earn in Canada.

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

1. 1. Fare: The driver receives 75% of the fare charged to the passenger (which is a formula of base fare + time + distance). There can also be fare surcharges:
      • • “Wait Time” fee (.35/minute when a customer is slow coming to the car)
        • “Surge” (a fare multiplier at very busy times/places)
   2. Promotions: Uber sometimes offers drivers an extra amount for specific times & places (though this seems to be less common these days).
   3. Tips: Most Uber Rideshare passengers do not tip. But when they do, Uber passes on 100% to the driver.

So: Uber pays its drivers Fare (75%) + Promotion(s) + Tip for each trip. A couple of notes to be aware of:

• • Uber also charges some fees to the passenger, on top of the fare. The driver does not receive a percentage of the fees – only of the fare.
  • If the app routes the ride along a toll road, the driver pays for the toll. Uber charges the toll to the passenger, then pays it to the driver.

Here are some recent fare examples from Toronto. (Uber’s formula can vary slightly from one province to another):

• • 2.4 km @ 3.75 minutes: Fare $5.31 > 75% for driver = $3.98
  • 4.8 km @ 23.5 minutes: Fare $14.17 > 75% for driver = $10.63
  • 6.7 km @ 31.0 minutes: Fare $15.07 > 75% for driver = $11.30
  • 15.4 km @ 16.25 minutes: Fare $18.40 > 75% for driver = $13.80

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 Uber in a single day/week by the number of hours online (logged into the app).

Example:
(Day) Uber pays me $135. I was online for 6.25 hours. So I “earned” $21.60/hour.
(Week) Uber 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 Uber income. These expenses fall into 4 general categories:

1. 1. Operational Expenses: Costs directly tied to my Ubering mileage. In other words, the more I drive, the more I pay. This is mainly fuel. (Remember, Rideshare involves a lot more kilometers than delivering meals or groceries.) I probably should allocate 15-20% of what Uber 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 Uber income.

One additional complication: Uber 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 Uber 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 Uber. 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 Uber Rideshare 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 Uber Rideshare 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 Uber Account, providing basic information to establish your driver profile.

Don’t worry – Uber 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 Uber’s sign-up page, you’ll notice it mentions Douglas and inserts an Invite Code douglasa1940ue. This tells Uber you were referred by Gig Drivers of Canada. We would be grateful if you will leave the Invite Code in place, so Gig Drivers can receive recognition and a small referral reward to help cover our expenses. Thank you very much!)