RIDEGURU
If Uber & Lyft lose 70% of their drivers in less than 8 months, how can they sustain a business model like that? Where do they find millions of drivers to replace them year after year?
Why do 70% of drivers quit driving for Uber & Lyft in less than 8 months?
Posted 4 years, 9 months ago
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Posted By
Sergio Avedian (Uberserge)
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Driver
Ride Apprentice from Los Angeles, CA
Blogger, Podcaster, Active Rideshare Driver/Coach
Active Uber/Lyft driver in Los Angeles, contributing writer for Rideguru and RSG (The Rideshare Guy), podcaster, rideshare driver coach, independent consultant to rideshare and tech companies.
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Comments
Becuase the gig economy sucks LOL
Funny side note: I was explaining what the gig economy is to my father the other day who is a small town lawyer (age 69) and he goes "Oh cool, so I work in the gig economy too!" LOL He thinks since he bills individual clients for different parts of work that it is like working gigs, just cracked me up.
He's a true IC, not like us, modern day digital slaves
I used to drive for Uber and Lyft; both are unsustainable due to the taxes and maintenance costs. Let's say you make $5,000 per month after Uber/Lyft's cut, then you deduct gas, which is by far the most expensive expense as a rideshare driver in my opinion, and maintenance, and it all comes down to your revenue, right? Wrong. You still owe taxes as a 1099. Let's say you end up with $2,000 after expenses, deduct 30% tax from that, and that is how much you end up making per month. I tried to think about how to minimize all that, and I cannot think of a single thing unless you get an actual job and do Uber/Lyft on the side, but if you do Uber/Lyft on the side, then you are looking at maybe another few hundred a month before taxes, so maybe around 100 dollars or so after all the investment.
Even if you rent a car, you are losing money. Yes, it appears so. It's a good idea to rent so you don't deal with all the issues of ownership, but the cost is higher than owning a ve…
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I used to drive for Uber and Lyft; both are unsustainable due to the taxes and maintenance costs. Let's say you make $5,000 per month after Uber/Lyft's cut, then you deduct gas, which is by far the most expensive expense as a rideshare driver in my opinion, and maintenance, and it all comes down to your revenue, right? Wrong. You still owe taxes as a 1099. Let's say you end up with $2,000 after expenses, deduct 30% tax from that, and that is how much you end up making per month. I tried to think about how to minimize all that, and I cannot think of a single thing unless you get an actual job and do Uber/Lyft on the side, but if you do Uber/Lyft on the side, then you are looking at maybe another few hundred a month before taxes, so maybe around 100 dollars or so after all the investment.
Even if you rent a car, you are losing money. Yes, it appears so. It's a good idea to rent so you don't deal with all the issues of ownership, but the cost is higher than owning a vehicle, and why is that? The rental company needs to make money. So if it costs you like $1,000 to maintain a car monthly, it will probably cost you $1,500 or $2,000 since they need to make money to cover the cost of ownership. If you
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It doesn’t mean they quit, right? It counts people who just wanted to try it for fun. Or just wanted temporary income.
We need to only be counting those who actually made it a career to measure the true figure around % of people quitting.
When you become a driver for ride share you don’t put down why you’re driving, fun, stop gap, additional income, full time etc. so you can’t go by full time drivers stopping driving. It’s getting on the platform and getting off the platform, it’s about 80% that stop driving in less than eight months. And who does become a rideshare driver for fun? It’ll be like getting a route canal for fun. 😂
True, but I feel these are important metrics that provide the context. I know many weekend drivers and those who really only drive like once a month for extra cash.
I do not know if that’s an exception or the norm though.
Here are the numbers according to U/L, about 70% plus are part time drivers who do 30% of the rides, 30% are full time drivers who do 70% of the rides. In either group the attrition rate is is upwards of 80%, why do you think that is?
Let's clarify.
the "70% part time drivers" are classified as part time because they drive for that service 30 or fewer hours a week.
Almost all of those drivers work 50+ hrs per week, but are driving 30 hrs on the Uber platform, (i.e. part time) and 20 hrs a week on the Lyft platform. (also part time)
Sure there are many that do this as a side or weekend gig, but they're in the minority.
FWIW, the 30% that are classified as "full time" are most likely Lyft ExpressDrive drivers who are prohibited from using their cars to drive for Uber, so they're putting in 40+ hrs on Lyft to makeup for the subpar pay and decreased ExpressDrive rates.
You can slice and dice it any way you like, the attrition rate is extremely high, what's the reason for that? THE RATES! Every time U/L cut, they'll let it surge in the city to attract new drivers, once they have enough, back to the program.
U/L thrive on high turnover, you would think it'll be the other way around. You would think they'd want to keep the veterans on the platform.
The experience!!
Truth be told, I drove two customers (two rides) a few years ago for “fun.” The first was my wife. :). And I did it to see what the big fuss was about.
Any driver must remember that excitement of the first few customers!
In your case, the wife doesn't count, so you may be the only driver to give a single ride to a stranger and quit. Why?
That's probably extremely rare, most people do it to put food on the table or as an inbetween job. A lot of driver are in It for the bonus, used to be quite high, those days are gone.
It takes them about 6-8 months to figure out what a horrible gig it is and stop especially if they experience price cuts. It definitely isn't for everyone, it used to be very lucrative a few years ago, I used to make over 2k a week easily. Now, I'm down to 10 hours a week at best, after 8 price cuts that is.
Simple. They all figure out that they are not making any money. Plus Uber has a way of just rubbing people wrong... LOL
Bravo, I think as a veteran driver, I’ve seen the good the bad and now he ugly, this gig is dead!
That is the problem with low entry, low yield jobs. There will always be people willing to work for less than you. It sucks.
57 million people are involved in the gig economy as per Forbes magazine, that’s a huge number and all these gigs are at most paying minimum wage, I guess people are switching from one gig to the next.
Ya I think it is going to take a long time before they burn through all the people willing to work for such an "easy job" and by easy I mean the barrier to entry is so easy.
Sadly I agree with you I think they like a very high turnover rate because the new drivers don't have a point of reference as far as their Baseline and don't know that they're working for peanuts
Well I think the sign on bonuses always help somewhat. I mean to someone down on their luck to get a couple hundred dollars quickly is quite a good deal. Uber just needs man power, they don't really care who is doing the driving just as long as they can keep the best profit margin possible.
Profit and uber are not in the same zip code. Uber Lyft and the pax are in a subsidized fantasy land.
Sign up bonuses were great a couple of years ago, they were actual bonuses. Now they're both only offering guarantees, newbies don't read the fine print and fall for it. They'll see 100 rides for 700 guarantee and they think it's a bonus.
I think I remember once when sign up bonuses were up to 1k.... the days.
Is there anything U/L haven’t eliminated or severely cut that benefited the driver?
They figure out they beat their brains and cars to a pulp just to turn their remaining equity in their car to short term cash to pay their bills, most don't save any money to replace the 20k equipment they take to work.
Our earnings been cut to a point where you end up losing if you drive. Been an Lyft and Uber driver for almost 4 years and I am daily seeing cuts on earnings and cancellation fees. Lyft and Uber does not realize we have to pay Taxes, extra Rideshare insurance, Gas, wear and tear - repairs , cleaning supply , mask's, bottle waters ect. Personally I can not afford to give out bottle of waters or candies anymore to my customers, at this point. Most of my rides pay $2.81 for usually 15-20 min of driving time to customer and to destination.I been a 5 star rated driver since the beginning and never went under 4.95 but my ratings don't pay my bills. Both companies need to rethink what percentage drivers need to get to keep driving, I had a customer last week and she payed $10,18 for her fare ,I as the driver got $2.83 out of it -but still got to pay Taxes, Gas, Rideshare insurance , wear and tear so please explain to me what is left for my time ? I am not surprised driver…
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Our earnings been cut to a point where you end up losing if you drive. Been an Lyft and Uber driver for almost 4 years and I am daily seeing cuts on earnings and cancellation fees. Lyft and Uber does not realize we have to pay Taxes, extra Rideshare insurance, Gas, wear and tear - repairs , cleaning supply , mask's, bottle waters ect. Personally I can not afford to give out bottle of waters or candies anymore to my customers, at this point. Most of my rides pay $2.81 for usually 15-20 min of driving time to customer and to destination.I been a 5 star rated driver since the beginning and never went under 4.95 but my ratings don't pay my bills. Both companies need to rethink what percentage drivers need to get to keep driving, I had a customer last week and she payed $10,18 for her fare ,I as the driver got $2.83 out of it -but still got to pay Taxes, Gas, Rideshare insurance , wear and tear so please explain to me what is left for my time ? I am not surprised drivers quit, I am honestly at a point where I can not continue driving for that out come. Last year I had put 60 000 miles on my car driving for Lyft and Uber in 15 month and this is only a site gig !
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Uber and Lyft advertised you could make good money (at one time yes you could). They still claim you can make money. They are just too funny. Actually you still can in some markets but probably not for long.
What other drivers said in their post and a few add ons.
Most new drivers don't grasp these things until they see it for themselves:
Many miles on your car/where and tear/ maintenance
How much you spend on gas now that prices increased
Rate cuts, bonus, surges, promotions cut or gone
How bad a drunk rider can be, a self entitled rider, violent riders, and the list goes on.
That you cant just jump in your car, turn on the app just anywhere and unicorn trips ping your phone all day
You actually have to get to know your market, research it, trial and error to find those spots you need to sit in. You actually have to figure things out or have a friend who feeds you all this. Like anything else it takes some time to get good at it unless you were a taxi driver:)
You just cant si…
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Uber and Lyft advertised you could make good money (at one time yes you could). They still claim you can make money. They are just too funny. Actually you still can in some markets but probably not for long.
What other drivers said in their post and a few add ons.
Most new drivers don't grasp these things until they see it for themselves:
Many miles on your car/where and tear/ maintenance
How much you spend on gas now that prices increased
Rate cuts, bonus, surges, promotions cut or gone
How bad a drunk rider can be, a self entitled rider, violent riders, and the list goes on.
That you cant just jump in your car, turn on the app just anywhere and unicorn trips ping your phone all day
You actually have to get to know your market, research it, trial and error to find those spots you need to sit in. You actually have to figure things out or have a friend who feeds you all this. Like anything else it takes some time to get good at it unless you were a taxi driver:)
You just cant sit in an airport queue, wait 2 hrs for each ride all the time and expect to make big bucks
You may have to drive 4 hrs in morning very early, 4 hrs at night very late
Its can be lonely on the road at times no co workers to vent to:) Find one is my suggestion makes life easier.
Its not as easy as everyone thinks it is. Not everyone has the personality or patience for this.
You cant just jump in your car, turn the app on, and drive aimlessly with no plan and no knowledge of your market. Well there maybe a few people in a really good market thats busy and rates are still good. If ypu know one let me know:)
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Agree with all of it but unfortunately most drivers don't put any brainpower into the gig.
Driving can be a slog. It takes a certain type of person to be able to do this work day in and day out. I'm not surprised so many quit. It's not for everyone.
But it's also a decent job with a really low barrier to entry. I don't think they will run out of prospective drivers anytime soon.
Most quit because it takes them that long to figure out that they're losing money, basically turning remaining equity in their car to short term cash to pay their bills. It used to be decent but without checks and balanced it's become modern day digital slavery.
TBH I would have thought most would quit before 8 months LOL
Where did you hear this stat?
It's from their IPO S-1 filing, their numbers not mine. It's actually worse according to a CNBC and Walk St. Journal study.
I think some drivers start driving just a a short term thing - summer break, in between contracted jobs, to make that little bit of extra money for that trip coming up, etc
Most start because they fall prey to Uber's marketing tactics promising tons of money. They got sued and ended up settling for deceptive marketing claims.
Because 7 out of 10 people figure out within six months that this gig really doesn't pay well, can be highly stressful at times, and especially if you're driving a newer car you literally break even. You'll find that to be true when you do your taxes and your mileage alone negates all the income you "thought" you earned!
Let's be honest, a LOW initial investment into a good used car that gets great mileage is the ONLY way you can actually make a few bucks doing Uber!
Well said, even that is getting tough these days with all the rate cuts, disappearing quests, consecutive streaks, boist zones, PDB etc. Uber and Lyft prey on newbies instead of keeping the veterans around.
Many quit because they realize the cash return isn't great. They are often lured in by the recruitment messages about how much you can potentially make and being your own boss. Then the reality hits pretty fast.
Most actually enjoy it, then they start doing the math. Paying for your own insurance, up-keep of your car, maintenance, repairs, etc.
When you drive thousands of miles a week, you will not believe the amount of fuel and maintenance expenses that you incur. Every new driver thinks the car is a sunk cost, i.e. something that is already paid for. (Hey, Uber used to tell us, "why let your car sit there and do nothing?") Boy, they are mistaken!
Cars break because they are driven, not because the time they sit there in your driveway. It's the wear and tear" that will cost you.
Couldn't have said it better myself, hit the nail on the head.
Isn't the unemployment rate really down right now too? I would think it would be harder for Uber and Lyft to keep finding new drivers for their high turnover.
I think the easy entry into this kind of job is why so many people do it. There are not many other jobs that you can sign up for so easily and start making money so quickly.
The unemployment rate is a complicated economic indicator. According to Barrons magazine, 57 million Americans are in gig economy jobs, so that skews the unemployment rate. The economy is not as strong as it is for the top as it is for the bottom.
But the topic was why do 70% U/L drivers quit in less than 8 months. The high attrition rate is due to people figuring out that the rideshare gig isn't worth it.
Wow, 57 million. That is pretty nuts. You know whats funny, I used to notice traffic was heaviest around the typical rush hour times (6-9am and 4-7pm) but over the last couple of years I feel like there is always traffic no matter the day or time. I used to wonder how so many people were not working in the middle of the day but now I realize that probably a majority of those people are just gig workers or odd job workers.
Yep, good observation, one thing rideshare has made worse is traffic. But U/L told us they solve the traffic problem. 😂