What are the pros and cons of driving for Lyft vs Uber? Let’s take a step back before we get into this though. According to a report by Business Insider, the number of US workers that opt to work multiple jobs has been steadily increasing over the past few years reaching numbers never before seen in 20 years.
A report by the Bureau of Labor Statistics states that from 1995 to 2013, that number had been declining steadily. But since then, the number climbed year after year according to the Business Insider report. This strongly suggests that more Americans are finding it hard to meet their financial obligations working a single job, which leads to them looking for side hustle opportunities like driving for Uber or Lyft. This isn’t the only reason, of course, you’d want to drive for those services. However, it’s one of the top ones if not THE top one.
Is It Worth It?
This is generally a controversial topic. The companies aren’t really very specific when it comes to this. Uber claims you can “drive and earn as much as you want” and “the more you drive, the more you earn”. These statements aren’t incredibly helpful.
Uber’s advertising also seems pretty enticing. They claim you can make $25/hour, have a flexible schedule and earn generous bonuses. The problem with most estimations coming from the companies is that they don’t factor in driver expenses.
In order to reach an adequate estimate as to how much you can potentially earn, you need to factor in:
- Uber and Lyft’s cut, which is between 20-25%.
- Car lease and payments.
- Car maintenance (especially because of all the wear and tear).
Ridester has written a really comprehensive post addressing the “how much can you make with uber or lyft” topic, you can read it here. MIT has also published a shocking research suggesting that more than 75% of Uber/Lyft drivers earn less than minimum wage, specifically a median pretax profit of $3.37 per hour.
The study was later challenged by Uber though, and those who had worked on it promised to reevaluate the results. You can read a lot of studies online as well as use potential earning calculators to help with your estimations. How much you earn is also hugely dependent on the city you drive in, the expenses in this city, and the time periods at which you actually drive (surge pricing times obviously pay a lot more).
To save you the trouble though, I believe the most accurate estimate for potential earnings after subtracting expenses is $10-$15 an hour. It’s not too bad for a side hustle and it’s mostly above minimum wage in most states.
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With that out of the way, let’s go back to comparing the two major ridesharing apps for drivers!
The idea for Uber was born when Travis Kalanick and Garrett Camp couldn’t find a cab, one night in Paris, December 2008. They then founded UberCab in 2009 in San Francisco. They started expanding internationally in Paris, Australia, and Latin America in the few short years afterward. By 2014, Uber had reached 100 cities worldwide and one year later, they’d reached 300. In 2017, Uber’s coverage crossed 600 cities and reached over 5 billion trips.
Lyft was launched in 2012 by Logan Green and John Zimmer as part of Zimride, a ridesharing company focusing on long-distance trips. Green’s inspiration to start the company came when he was consistently ride-sharing to visit his girlfriend from Santa Barbara to Los Angeles.
In 2017, Lyft hit 300 cities and is now valued at $15.1 billion as of this summer (2018).
How to Become a Driver?
To become an Uber or Lyft driver, you must meet some minimum requirements and then go through the application process. You should generally be at least 21 years of age and have at least 1 year of driving experience. Uber requires you to have 3 years of driving experience if you’re under 23.
You must also have a valid, in-state license and auto insurance. You should also be able to pass a 7-year background check (10 years in some states). This includes: no drug offenses in the last 7 years, no major driving infractions, no speeding violations (3 years) and no other criminal history in the last 7 years.
Your vehicle needs to be 10 years old or newer, have an in-state license as mentioned previously as well as pass a vehicle inspection. These are roughly the steps required to become a driver:
- Make sure you meet all the driver and vehicle requirements.
- Sign up online.
- Get your vehicle inspected.
- Submit required paperwork.
- The background check will start and if everything goes well,
- Set your schedule and start driving.
Which One Will Make You More Money?
Sadly, there’s no straightforward answer to this, but I’ll attempt to guide you through some information that should help you make a decision with regards to the monetary compensation aspect. First off, let’s take a look at their respective fees.
Uber now takes 25% of the total’s rider’s fare, while Lyft takes 20%. According to a survey by The Rideshare Guy, Lyft drivers earn $17/hr an average while Uber drivers earn $15/hr. Lyft drivers are also happier overall.
Does this mean it’s a slam dunk though? Lyft wins? Well, not necessarily. Uber has a bigger market share and typically more customers. So while you may earn more per hour with Lyft, the downtime/idle time is also generally longer as well. The solution?
A lot of drivers opt to use both apps at the same time to get the best out of both worlds. Just make sure you keep Uber the “active app” when doing this and leave Lyft in the background because Uber tends to shut down automatically after a few seconds if left in the background.
When using both apps together, simply accept the closer ride to you and decline the other. You may be inclined to accept whichever request came in first. However, a smarter approach is to accept the closer one to your current location to minimize “dead miles”, the term used to describe driving around without a passenger (i.e: on your own dime).
What I like About Uber
Below are 6 things I like about Uber over Lyft.
Since Uber controls roughly 70% of the market, you’re much less likely to stay idle with them than with Lyft. This doesn’t just mean that you’ll wait for less on average between rides, but it also means that requests are more likely to be closer to you than Lyft (because more people are using the app, increasing the likelihood of someone being nearby).
This also provides somewhat better consistency in terms of income. This is because you may have planned to say, drive for 5 hours every day. If you get 1 to 3 rides with Lyft on average every day and get no requests on some days, that’s a lot of wasted money because you had committed these hours to drive but there just wasn’t any work to do. With Uber, however, you’re much less likely to stay idle and hence the income source is a bit more dependable.
Surge or Peak pricing help drivers earn a lot more. While not always a good idea (because surge areas attract drivers like bees to honey, so you’ll never be the only wise guy), sometimes it pays to “chase” an area where there is a current surge. Uber’s surge maps work well.
With Uber, it’s easy to tell whether a request was on surge. It’s also easy to determine what specific surge pricing (the factor) is currently active for each area on the map. Lyft, however, mostly fails miserably in this area. They’ve only recently started notifying drivers whether a request was on “Prime Time” pricing.
It’s also hard to distinguish what Prime Time percentage is currently being applied because of all the pink color shades that supposedly represent the factor. Worst of all, the pricing on the map is often inaccurate or outdated.
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Physical Driver Support
Both companies have support ticket systems and Lyft has some support hubs. However, Uber has a very extensive network support hubs (Greenlight hubs). They also have 24/7 phone support.
While both companies have got you covered in terms of online support, some issues are just better addressed physically (in-person). Big glitches with the app, account suspension problems and other major issues are just generally handled faster when you get to talk to someone face to face.
High “Poor Rating” Tolerance
While this may not be the best thing ever for riders, it does count as an advantage for drivers. Uber is generally reluctant to disable driver accounts over poor ratings. They also have a system in place that helps them remove “invalid ratings”.
For instance, if a rider was asked why they provided a certain negative rating and the company deems it uncalled for, they may remove that rating.
Easy Request Rejection
Uber has an easy “no thanks” button to reject requests. This, combined with not tying your bonuses to your ride acceptance rates puts you a lot more at ease with rejecting rides you don’t feel like taking, for whatever reason. It also makes it an easy decision to ditch an Uber ride over a more lucrative Lyft ride if you’re using both apps at the same time *wink wink*.
Less Strict Vehicle Requirements
Vehicle requirements vary between states and are often heavily influenced by local laws. However, in most areas, Uber is okay with older car models while Lyft requires newer ones. This represents a lower barrier to entry for people with older car models who would have otherwise been out of luck.
What I like About Lyft
And now for Lyft’s turn!
By the end of 2016, Uber had over 80% of the market. While it still controls the majority of the market today, Lyft is quickly catching up. This year, that share shrunk to 68% while Lyft’s went up to 32%.
It’s also worth noting that in 2017, Lyft more than doubled their business as Uber struggled to keep a growth rate of under 10%. Some cities such as New York even saw Uber’s share shrink. While Lyft may not be the big dog on the block right now, they sure are showing a lot of promise.
Lyft has been criticized numerous times for requiring drivers to complete a certain number of rides during peak times in order to get their bonus. This frustrated a lot of drivers who’d lose their bonus just because of this policy even though they could be doing a ton more rides overall than those who actually got these bonuses.
Uber does not have this issue as they count all completed rides towards your bonus. Uber also does not require an above 90% ride acceptance rate while Lyft does.
How is all of this in favor of Lyft, then? Well, Lyft’s bonus criteria might not be the easiest to meet, but it’s consistent. Uber’s bonuses are generally volatile. It’s not easy to determine exactly what you need to do to get a specific bonus. Bonus amounts and policies also change relatively frequently. With Lyft, it’s easy to tell exactly what you need to do to get your bonus. This allows you to start your week with a game plan, and hence you’d be more likely to hit the bonus’ requirements every week.
Uber started with a 20% commission and “grandfathered in” those who got in at that rate. Late 2014 though, new drivers were forced to fork out 25% of their earnings. With Lyft, it’s just 20%. While the difference may not be that huge, things add up when you consider this over hundreds and eventually thousands of rides.
Destination Sneak Peek
When you press “Arrive” on Lyft, you’ll get to see your destination. You could then determine whether if it’s worthwhile or not. If it isn’t, you could cancel and wait for a better ride. This is especially helpful for very short rides that may not often be worth it.
This also helps with rides that drive you out of town or to rural areas where you’d be unlikely to catch another ride in that area after dropping off your previous rider, which translates to a ton of dead miles and wasted money going back to the city on your own dime.
Lyft implemented in-app tipping features since day 1. Lyft riders are used to tipping through the app, they’ve become accustomed to it as part of their experience riding with Lyft. Uber only recently introduced an in-app tipping feature, and it’s by no means a rider’s favorite feature.
Uber riders have simply gotten used to getting out of the car and then getting charged for the trip’s price by Uber. They’re not used to doing anything with the app after the trip has ended, except maybe rate the driver. For that reason, you’d often see a lot more tips coming from Lyft.
Uber got a lot of bad press in 2017 alone. One story was about a cyber-attack cover-up, another was about the loss of high-ranking executives including its CEO, and another was regarding sexual harassment claims in Uber’s workplace.
This is not everything though, Business Insider has actually compiled a whole 40-entry list covering Uber scandals and controversies. In short, Uber is definitely not the most ethical company ever and some people may not feel entirely at ease driving for such a company and lining up their pockets consistently. If you’re one of those people, then Lyft might be a good choice!
Driving for Lyft vs Uber: Which One Should You Go For?
My top recommendation here would be to sign up for both services, as mentioned previously. In most cities, you’ll typically get a lot more Uber requests than Lyft requests, but you do earn more with Lyft on average.
That said, downtime and dead miles still cost you money, so in most cities, Lyft alone is not enough. This is where Uber comes in to fill in the gaps, as Uber is almost guaranteed to keep you busy most of the time.
If for some reason you want to sign up for just one service, then my recommendation is to go for Uber. Sure, you’ll probably earn less per hour on average but it’s likely going to be more consistent than Lyft.
When should you sign up for Lyft exclusively then? Well, if you live near (or in) a big city, try signing up for Lyft first, get the bonus and then sign up for Uber as well. It’s almost always recommended to drive in cities where the population density is higher and hence downtime and dead miles are generally lower. This goes for both Uber and Lyft.
Some people also live in the suburbs but work in the city for that reason. In that case, you can use the “destination” setting and start using the apps on your way to the city center. Utilizing the destination setting will allow you to pick up riders going in your direction, and once you reach the city center, you can spend your workday there.
Driving for Uber and Lyft may help you supplement your income or even potentially replace your full-time job. The job can be demanding at times, the pay isn’t incredible and it’s not possible to create a passive income driving for Uber or Lyft. You’re technically a business owner, but one of the top advantages a business owner has is that their business makes them money without them being involved in every aspect.
They can go on long vacations while still making money. That’s called passive income. If you’re looking to build passive income, you might want to look into starting your own online business. Niche Pursuits can help put you on the right path and get you started right away, for free. Check out our “Start Here” section.
Have you driven for Uber or Lyft before? Please do share your opinion in the comments section below, and let me know if you have any questions!