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Today one of my twitter followers, and someone I actually know from the startup community here in Cincinnati, posted an interesting tweet:
“I always open up my @Uber/@lyft email receipts, wincing at the long ride I took, thinking it’ll be $20. It’s consistently less than $9. [celebratory emoticon]
The tweet got me thinking about whether this is actually something to celebrate. You see, I had just read an article in the New York Times about Lyft’s attempt to find a buyer, and had come across this bit of information:
“Companies like Lyft and Uber typically take 20 percent to 25 percent of the cost of each ride.”
That means that for my friend’s $9 drives, Uber and Lyft are typically taking out $1.80 to $2.25. To keep things simple, we’ll split the difference and say that they take out $2, leaving the driver with $7. As you may know, the people that drive for these companies provide their own cars and vans, and have to pay for their own gas and maintenance. My friend is in LA, and the average price of a gallon of regular gasoline today is $2.68, according to the LA Times. That comes out of the $7 left to the driver after Uber or Lyft have taken their cut. If the driver has to use half a gallon to pick up my friend and get her to her destination, that means $1.34 should be deducted from the $7. So the driver has netted a grand total of $5.66 on this gig, and that doesn’t take into account maintenance and depreciation on the car.
Still cause for celebration? That cheap ride is great for the passenger, but is the driver making any money? Perhaps there is a reason for the regulated rates that taxis charge – these rates ensure that the drivers can actually make money driving a taxi.
