Why NO ONE should drive for Uber in Tahoe

Lake Tahoe Uber Drive Says No More

Let me start by saying, I have loved using Uber for convenient rides everywhere from Sydney, Australia to Boston to San Francisco and back again. I am a huge proponent of using Uber in most situations…

…that said, I ran a little experiment over the Holidays when Uber was launching in my hometown in North Lake Tahoe and found that as an Uber Driver in Tahoe I was losing money or barely breaking even at best. Not good! My best trip was netting $1.66 on a $6.00 fare. My worst – being down $12.62 on a 2.5 hour foray (last time I drive to South Lake to pick someone up). Now given, you can say I am only out money if I include wear-and-tear and use the standard mileage rate ($0.575/mi) for my expenses, but even just taking into account direct fuel and maintenance expenses I am making well less than minimum wage while decreasing the value of my car at the same time.  Bottom line is, something needs to change with Uber in Tahoe before every driver out there learns the sad truth – it is currently a money losing proposition.

Here is my threefold take on Tahoe’s Uber-problem:

  1. Tahoe is split by two states and you can only pick up in one making most trips uni-directional;
  2. There are very few in-town trips; and
  3. Uber is subject to what I will call the populational gravity effect.

The result is unsustainable earnings at best unless you assume no incremental wear, maintenance or cleaning:

 Earnings before Taxes after Taxes
– after Uber Fee, Federal Mileage & Phone Data $ 1.53/hr $ 1.14/hr
– after Uber Fee, Fuel & Maint (prorated) & Phone Data $ 6.71/hr $ 5.03/hr
– after Uber Fee, Fuel & Phone Data (no maint/wear) $ 12.57/hr $ 9.43/hr

(more about these numbers below)

Two States

Every Uber forum will tell you not to drive anywhere between trips – it is a useless expense. Since Tahoe is split by two states, many of your trips as a Driver become one-directional because if you pick in Nevada and drop off in California, you have to scurry back to Nevada before you can go back online and begin accepting trip requests again – and those new riders often want to go back across the state line. This means that your costs are roughly double for every trip because you cannot just pick up another trip where the last one left off. If you are a California Driver in Truckee, Tahoe City or South Lake this may not be as much of a problem for you, but I would love to hear your input.

 

Populational Gravity Effect

By the nature of taking people where they want to go, Uber naturally has a gravitational pull toward populated areas which means if you are working in a less populated area (i.e. Incline Village, Nevada – pop 8,800) near more populous areas (Reno [250,000pop], Carson City [54,000], South Lake Tahoe [24,000], Truckee [16,000] etc), you are highly likely to have a trip outside of town to one of these other more populous areas every day. Once you drop someone off in a bigger town/city you are more and more likely to continue receiving trip requests within that area. If you don’t live in the biggest city/town in your area and you drive for Uber, good luck – every driver eventually receives a trip to that city and at some point you have to return home, only to end up getting sucked into that city again the next day by its inescapable gravity field.

A typical day driving in Tahoe:

  • Daytime trips to/from Ski Resorts primarily:
    • Mid morning (8-11am)
    • Mid afternoon (3-4:30pm)
  • Evening Trips to/from
    • Casinos
    • Bars
    • Restaurants
    • Hotels
    • Rental Homes

Here is a sample of some trips from Incline:

 

By the numbers

I invite you to look at my numbers too and tell me what you think: danherrdotcom.files.wordpress.com/2015/12/uber-tahoe-costs-29-dec-2015.xlsx

 

I can see how Uber would claim a driver “makes” more than $20/hour – but that is before Uber fees, costs to operate etc. From my experience, you can show that during my actual trips (not including before or after mileage) my fares were $282.05 for the 5hr, 14 min and 21 sec I spent “driving” on trips – that is $53.83/hr, but remember I can’t just turn around and pick someone up where I drop off most of the time – I have to drive back to Nevada, and at some point return home. If I include the hours driving to pick up and return from dropping off that quickly turns to $21/hr. But that is not an accurate number – you have to pay Uber, you have to pay for Fuel, and somewhere in there needs to be maintenance and phone costs:

Total Fares/Sales $282.05
Expenses
  Uber Fee $62.85
  Safe Rider Fees (reimbursed by Uber for Tahoe) $0.00
  Mileage to start (@ $0.575/mi) $34.99
  Mileage on Trip (@ $0.575/mi) $79.44
  Mileage returning (@ $0.575/mi) $83.46
  Cell Phone Data $1.59
Total Expenses $262.34
 Net Income $19.71
 Taxes (25%) $4.93
Net Profit $14.78

 

Breaking this down by the total amount of time I was on the road:

Trip Time 05:14:21 5 hrs 14 min 21 sec
En Route Time 07:40:39 7 hrs 40 min 39 sec
Total Time 12:55:00 12 hrs 55 min 0 sec

Dividing my $19.71 of pre-tax earnings and $14.78 post-tax by 12 hrs and 55 minutes gives you the $1.53/hr and $1.14/hr respectively that I gave above.

Of my driving it broke down like this:

Mileage (mi) (per)
To Start 61 18%
Trip 138 40%
Return 145 42%
Total 344 100%

I understand the argument that the Federal Mileage rate of $0.575/mile might be a bit high depending on your vehicle and the actual wear-and-tear, so I included a second and third calculation below. The second set of numbers ($6.71/hr & $5.03/hr) includes 87 octane Fuel prorated by mileage between fill-ups and Maintenance by mileage based upon my 12-month average maintenance expenses (oil changes, tires, tire rotations, checkups, cleaning supplies, etc), but does not include any incremental depreciation or wear-and-tear. The third only includes fuel. For me those numbers worked out to $0.17/mile for fuel and $0.22/mile in maintenance for a total of $0.39/mile.

 Earnings before Taxes after Taxes
– after Uber Fee, Federal Mileage & Phone Data $ 1.53/hr $ 1.14/hr
– after Uber Fee, Fuel & Maint (prorated) & Phone Data $ 6.71/hr $ 5.03/hr
– after Uber Fee, Fuel & Phone Data (no maint/wear) $ 12.57/hr $ 9.43/hr

Again these numbers do not include any payment for my time sitting around waiting for a request to come in – simply starting when I accept a trip and stopping when I get back in my workable area.

 

What I have surmised is that the Balance of Uber Earnings (green line) as a function of mileage for an Uber Drive in Tahoe is a losing proposition:

Uber Far & Expenses

Uber Fare, Uber Fee, other Expenses and Earnings Balance by trip distance (mi). View original interactive Google chart at jsfiddle.net/DanHerr/4cmuezmt/4/embedded/result/. Source file is available as well: danherrdotcom.files.wordpress.com/2015/12/dont-drive-for-uber-29-dec-2015.xlsx

I encourage anyone/everyone to have a look at my data and let me know if you draw any different conclusions – perhaps I am missing something. But my recommendation would be that until Uber figures out how to have us pick up across state lines or increases the fares in Tahoe, it is not worth your time to be an Uber Driver.

danherrdotcom.files.wordpress.com/2015/12/uber-tahoe-costs-29-dec-2015.xlsx

Notes & References

In all cases I went back online in Nevada as soon as I crossed back into Nevada again (Nevada drivers are automatically logged out at the end of a trip in California and cannot log in again while in California). There are some cases where I could have spent more time driving outside of my “area” (generally Incline Village and Crystal Bay), but at some point in the evening you need to return home. Generally if I waited for than 15 minutes without any request, I began moving toward home while staying online.

The above generally assumes:

  • $2.00 Base
  • $0.20 Per minute
  • $1.10 Per mile
  • $5.00 Minimum
  • $1.70 Safe Rides Fee when/if charged
  • 25% Uber Fee
  • 40 MPH average speed
  • 20 MPG fuel usage when needed
  • $0.575 Per mile standard federal mileage cost rate when used
  • 25% Tax Rate when there are any earnings

All of the above does not take into account that Uber’s earnings system has issues causing it to double charging me for Safe Rides ($1.70/ride) which they have confirmed via email they are working upon. Above I have taken the assumption that Uber will correct these issues and pay me the balance due of $1.70/ride.

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Comments

  1. You are awesome. I live in Truckee and was going to give it a shot as I am a teacher, and life coach looking to make extra easy cash for the summer. Uber is not it 😦 would love to connect you are brilliant!

    • Thanks Lovina – happy to help 🙂 I love Uber, but I was not able to make it work for me in Incline. Maybe it would be different in Truckee? Always happy to catch up over a beer or coffee next time I’m back in town.

  2. Frank and beans says:

    Immediately calling bullcrap I didn’t even get through the first paragraph with out finding lies so what is the point of reading the rest of your drivel… First of all if you have been driving prior to December 2014 you earn 80% of your fare so your 6.00 to 1.66 calculations is so off its rediculious! And even if you started December 2015 you still earn 75% of your fare so it’s still way off base…. And you are independent contractor they don’t take taxes essentially you are paying your own taxes so let’s say that 6.00 ride is down to 4.50 (I am calculating you at the 75%) you are then taxing yourself at 75% to get your 1.66(or around there) and no independent contractor in his right mind is taxing themselves at that rate.

    • Frank and beans – thanks for the input. Maybe there is a better way to look at it or something that I am missing, so let me give you the full download on that ride:

      December 22nd, 2015 I accepted a ride while on Tahoe Blvd near Raley’s in Incline Village – the request was for pickup at the Hyatt Lake Tahoe in Incline which was about 1.0 miles away. After pickup I drove for 3:45 for a paid trip total of 1.39 miles providing a gross sale of $5.98. One could argue that I should have just stayed right there until I received my next ride, but when it was just launching in Tahoe, that would not have been reasonable (many hours between rides) so I add in the 0.3 miles back to where I started for a total of 2.69 miles. Taking out Uber’s fee of $1.07 plus the Safe Rider Fee of $1.70 I was left with $3.21 (what Uber actually paid me). If you are to consider this as a business, you need to account for cost of operation of the vehicle during that mileage and/or time usage. One could argue that using the government’s $.575/mi is too high for me to use, or you could say that I should only include gas costs, but applying that standard mileage cost to my 2.69 miles gives a cost of $1.55 leaving $1.66 truly in my pocket ($3.21-$1.55 = $1.66). I call this my best ride because after I pay back my expenses for my vehicle for that usage and consider that from start to finish this ride took 15 minutes out of my day, that is $6.65/hour – and if that is the best I can do driving for Uber after I account for costs, then to me it is not worth it.

      To be more conservative and tackle it another way I calculated my incremental maintenance cost per mile for my 2014 Subaru Outback and found that it was $0.22 per mile if I prorated it assuming that my owning my car is a sunk cost (no cost for the loan). Fuel works out to $.17/mi with 20mpg at $3.30/gal. This gives me a cost of $1.05 ($.39/mi) in dollars that I actually have to pay to keep the car operating for a balance of $2.16 (or $8.64 per hour). Even if I say that the trip only took me 10 minutes that is $12.96/hour. If I could line up a bunch of back-to-back rides in Tahoe and not have all of the other issues I outlined above (rides across statelines etc), then it could be worth it for the right person. But that is still less than soon to be every job in CA including McDonald’s and it wears on my vehicle. This same ride was two people getting into my car with dirty ski boots on and putting skis in my car.

      For me, all signs point to not worth it in Tahoe right now, but I invite you to look at my spreadsheet linked above and draw your own conclusions or try it on your own and let me know what you experience. Just trying to help.

  3. I did 2 runs tonight and made a gross amount 4.50. I drove six people 2 miles. Wondering if Lake Tahoe rates got lowered by uber? I went home to bed.

    • I also drive yesterday August 23, 2016 and noticed a significant drop in fares. I did an Uber trip estimate and it showed $0.12/min and $0.75/mile, much lower than days past. I emailed Uber support and they didn’t state there was a rate change but they did request trip ID information to investigate, they have yet to get back to me. There is no way Uber Drivers in Truckee / Tahoe will make any money at this rate with the long pick up travel times and miles. I wont be driving if this rate sticks.

      • The pay might have just changed on Tuesday. I drove Monday uberX for 4.36 minutes and .98 miles and was paid 4.65. Tuesday I drove 1.51 miles and 6 minutes and got paid 2.25. ????? Drove again 10 minutes later same place and was paid 2.25.

      • Received this response from Uber Support, although it will probably get me nowhere, I asked them to adjust the rates paid for my trips on August 23, 2016.

        ADITYA MISHRA (Uber)
        Aug 24, 16:00 PDT

        Hi Rich,

        I understand your concern regarding rates. I will surely address this for you.

        The current rate for Sacramento :

        Per Minute – $0.12
        Per Mile – $0.75

        The current rate for Tahoe :

        Per Minute – $0.45
        Per Mile – $1.85

        To confirm you there is no such change in the rates.

        Please let us know if we can assist with anything else. We are here to help you.

        Best,

        ADITYA MISHRA
        help.uber.com

        Rich Anderson
        Aug 24, 15:49 PDT

        Did any UberX per minute and per mile rates change in the Sacramento service area recently, spacifically Truckee/ Lake Tahoe area.

    • I am happy with the pay so far so good. I did get a few bonuses also. No problems.

      • The rate is still showing 75 cents a mile and 12 cents a minute hear in Lake Tahoe. They haven’t restore it yet. I am not driving until its fixed. I need a break anyway.

  4. I’m a SLT Uber driver. Uber just dropped rates in California, so I’m considering only going to stateline and refusing trips that go into Nevada because of the lost time, gas etc. I believe that as independent contractor I have the right to do that. What are your thoughts?

    • Personally I think that is fair, but I can’t say how Uber’s algorithm will change how often it assigns you rides if you don’t accept a majority of the ones that come your way (maybe it doesn’t – I don’t know). Would be interested to hear if you experience any negative feedback loop as a result.

      • Tamilin Obrien says:

        Not only do they dock you but they also send yu on way out calls. Uber has changed their rates and the name of ‘Uber respondant’ I saw above was same one who responded to my emails several times. The answer was the same, I ‘needed to send screen shot for the missing trips’, and supposedly not any change in rate’…. Scammed…Uber is putting local companies out of business. Your break downs are exactly right. Losing proposition and screws local small business.

  5. You are very astute at figuring real costs and the downsides of the loss of return rides. While I am still “ubering” I am also surprised at the cost of Rideshare insurance were I to find the need for it. I hope Uber will review the settings they have on fare levels and raise them. One of the issues is just simply car maintenance costs. I have my car paid off, but if I were financing a newer car, the only benefit would be a loss on my tax returns. Ron

    • Thanks Ron – and great points for sure. I definitely didn’t include any Rideshare insurance in my numbers, so that is a missing component if you are to be truly prudent. And agreed on the maintenance cost side. Do you find the returns reasonable with a fully paid off car?

  6. Wow that IS bad. I was really confused by this post at first until I realized you are on the Nevada side. A friend and I drove several days last winter in the Truckee area. It was nothing less than insane. Base fares are set more than double that of SF area, and that’s before surge which due to such a small market surges to 4-5x every Fri-Sat night. Rich Marinites seem to have no problem paying $100 for a 12 minute ride to the bars if it’s 5 pax and it means no DUI’s. I know I should keep this little secret to myself but honestly I don’t think it matters as the slightest bit of snow and 80% of drivers are shut down. Driving Uber with chains just isn’t feasible, and now there is UberSki which gives drivers an additional $5 per ride. A $12 ride in the Bay Area was like $22-28 in Truckee. I was only able to drive now and then but my friend did two 7 hour days made $400 a day net. Not sure if it’s still true but at the time CA Lyft drivers could pick up in Reno so if you were lucky you could avoid deadheading back to Truckee. Still, a non-surge trip to Reno airport was $85 to $110 and at 40 minutes there and 40 back it’s very worth it. The trick is you just need to use waze to see when 89 is backed up and avoid it. If there was a way I would post my waybill showing the fare breakdown. The other commenter mentioned $.45 a minute and $1.85 a mile. That seems to be what I remember. If I were you I would find a way to get a CA DL and create a new account in CA or talk to Uber about adding you as a CA driver somehow. Reading the other comments it does appear the California rates were dropped to Sac rates for the summer. Let’s hope they are restored for the winter. I will inquire with Uber now as I just signed my ski lease.

    • sUBERu – first off, love the name! Secondly, wow – $400/day net is pretty damn good. Things may have changed since I first wrote this post, so good to hear if that is the case now. And correct, I was only look at it on the Nevada side because that was all I could ever access. I have a CA drivers license now, so might give it a try again this winter for a few, but we’ll see. Thanks for all DL – hopefully they are starting to dial it in a bit more.

  7. Your absolutely right! Except I work for Uber 18-20 hours a week. I make about 100.00
    Dollars a day. Usually about 125.00 per day
    If you evenit out working 6 hours a day 3 days
    A week. It cost me 25.00 a week for gas 9.00
    Dollars a week for car washing. And 2.00
    A week for water and mints. So that’s 36.00
    A week for expenses. So Uber pays me every
    Wednesday about 375.00 for a slow week.
    Not bad. So $350.00 a week is what I get
    Paid. That is not including a busy weekend
    Or concert, or if it’s surging. This little change
    Is worth it for me to work Uber! That’s
    An extra 1500.00 a month whichs supplements my social security income. Money I did not
    Have. I don’t depend on welfare or other
    Government programs. I’m still low income
    But an extra 1500.00 a month is worth it. I know I have to pay my own taxes, but my
    Write offs allows me to break even on my taxes
    So with my social security and Uber I’m
    Bringing home 3000.00 per month. Instead
    Of half that amount. Yes I put on miles
    But you need to be smart and not drive
    Around which keeps my miles down. I just
    Drive when I get pinged. My town is very
    Small so on average I’m putting about 30
    Miles a week or 120 miles a month. I have
    An economy car. It’s a Toyota RAV4. Last
    Year I bought new snow tires. Which I really
    Needed for personal use as well as work. Not a bad deal in my case. What do you think?
    I could care less about working on the Nevada side. I get enough business on California
    Side . It works for me. I’m a retired Nurse. I meet lots of real nice people from all over
    The world. That’s a plus.

    • Thanks for all the awesome detail and glad to hear it is working well for you! I definitely agree with the meeting people, I think that was my favorite part for sure. If I was in your shoes I would probably say, “Why the heck not?!” Hope you’re enjoying all the awesome snow right now 🙂

  8. i often need rides with uber or lfyt and find it terribly difficult to see a driver in my location most of the time. would like the phone numbers of trustworthy people for when none show up in my area. these are trips from the peppermill reno to crystal bay, crystal bay to grass valley, crystal bay to redhawk, and crystal bay to stones cardroom in citrus heights. most of these trips are over $100, so i dont see how someone taking me could honestly claim theyre not making enough

    • Try changing your pickup location to Stateline Dr in Crystal Bay. This is right next to Tahoe Biltmore. This will put you in CA where many more drivers can pick you up. Because of the state line issue North Tahoe/Truckee drivers can’t pick you up in Crystal Bay. I find it hard to believe you can’t find a ride from Peppermill. I have never waited more than 10 minutes for a ride anywhere in Reno.

  9. Jennifer Quinn says:

    Hi!

    I’m just a visitor (although I’ve been coming here since the 80’s) from the Bay Area. I’m also an urban planner focused on tourism planning and economic development.

    While stuck in traffic going to Squaw, I was just thinking how perfect it would be to have more rideshare service up here. I’ve heard all sorts of complaints about Uber, and your argument makes sense. Have you looked into Lyft? They’re considered to be more pro-driver than Uber, so they would seem to be a better fit. I’d love to hear from a driver’s point of view. Thoughts? Experience?

    Many thanks for posting!

    • Jennifer,
      Thanks for the note and great thought. I looked into driving with Lyft in Tahoe when I started doing the Uber driving, and they were slow on the uptake in Tahoe it seemed. It took more than 2-3 months plus two scheduled appointments where no one ever showed up before I ever heard from any Lyft reps in Tahoe, so unfortunately never gave it a shot. In my experience as a passenger with Lyft, the drivers and the experience has always been a level above (at least in the Bay Area). I imagine most of the economics would be similar, but I would love to hear from some Tahoe Lyft drivers. Problem is, even looking at the app right now, I haven’t been able to find a single Lyft driver in Tahoe.

I welcome your questions, thoughts, comments, critiques, and words of wisdom

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