Not to spoil the surprise but how much money you will put in your pocket is complicated.
Rideshare services like Lyft don’t have a straightforward formula for driver pay. I wish it were as simple as saying drivers get X percent of what riders are charged. It once was, but it’s not now.
I will not get into if the money earned is fair. Ultimately that comes down to an emotional decision by each driver. One person’s victory can feel like defeat to someone else.
Some people like Damon are super hustlers and score impressive earnings. Other drivers are comfortable with waiting in queues at the airport and killing time. Who do you think will earn more?
The Only Way to Know How Much Lyft Pays
It would be fantastic if I could tell you drivers get X cents per mile or Y cents per minute. But unfortunately, that data doesn’t exist in the wild.
When it comes to “how is my pay calculated,” Lyft says, “What you’ll be paid is based on how long you drive during a ride (time), how far you drive during a ride (distance), 100% of what passengers tip you (tips), and bonuses you make (bonuses). The biggest part of your earnings will be from the time and distance driven with your passenger in the car, plus you get all of your tips and bonuses.”
I’d say that’s a fair statement. However, it does not tell you what percentage of riders tip. I have no way of knowing the national average, but tips seem to be the exception and not the norm from our testing experience here at the Penny Stupid Project.
Damon has been chasing bonuses and Prime Time surge perks like a pro, which has increased his pay.
Lyft says bonuses and additional money for rides are generally available when more passengers need rides and more drivers are required in specific busy areas. That appears to be true.
Lyft Driver Pay After First Week
After his first five days of driving for Lyft, Damon’s initial results are.
|Total Earnings for First Five Days||$1,365|
|Number of Hours Worked||38|
|Income Per Hour||$35.92|
|Number of Rides||83|
|Tax Deductible Amount for Miles||$899|
|Cost of Gas||$289.42|
|Total Bring Home||$1,075.58|
For the latest information from Lyft on driver pay, visit this page.
Honestly, the only way to know how much you will make is by driving for Lyft and trying it out.
Lyft Driver Pay is Not a Secret Conspiracy
I find it hard to get outraged by the lack of clarity regarding Lyft driver pay. Damon and I have two different views on the same subject. Sure, Damon is the guy in the seat and wants to know what rides will pay before he accepts them. That is understandable. A good side hustler should focus on the return for time invested.
I’m not in the driver’s seat and doing the hard hours Damon is. So I can understand why Lyft wants to maximize income, and the formula for doing that is not as easy as anyone hopes.
Logically, Lyft wants to find that balance between company income and driver retention income. If they chased away all drivers with low pay, nobody would be available to fill rider requests.
Demands High, Wages Low
In my many decades, I’ve run into many people who have an impression that their jobs have high demands and never pay enough. But is that a fair perception based on what others have to deal with?
I once had someone tell me they were looking for a high-paying, low-responsibility job. Good luck with that. I’ve also had someone tell them they wouldn’t even bother to get out of bed for a $25 per hour job.
If you decide to try Lyft out and it’s not working as you hoped, change your approach, or stop doing it. You can control your job satisfaction. There is almost no expense involved to start.
If you have questions or need some advice to maximize your Lyft income, ask away here.
Lyft is handing you customers almost as rapidly as you can service them at times. It’s up to you to maximize that opportunity. Your willingness to accept rides and the area you are located will influence that.
As a rider, I’ve had my share of rideshare trips where the driver was less than excellent.
I’m a big tipper for impressive service and a lousy tipper for crapy service. Unfortunately, some people don’t tip based on how fantastic the experience was.
Interestingly, Damon has observed service workers like waiters, shift workers, and others are the best tippers. I suppose they understand what tips are about.
I’ve had some incredible rideshare drivers that went above and beyond to make the trip and interaction a positive experience. Other drivers clearly could have cared less I was in the back.
Let Me Give You Driver Examples
Great Rideshare Experience
I was stranded in a strange town after a breakdown. I didn’t have any necessary supplies like toothpaste, etc. My driver listened to my story and said, “Don’t worry. I got you.” We drove around until we found everything I needed before dropping me at the hotel.
Less Than Great
The driver didn’t even say hello, was wearing his mask under his chin during the pandemic, and was on the phone the entire trip. The driving was jerky, with abrupt starts and hard stops. The driver didn’t even acknowledge I was in the car.
Some Upset About How Lyft Driver Pay is Calculated
A lawsuit was filed in California in June 2022 against Uber and Lyft. In the suit, the Plaintiffs provide their take on how income is calculated.
The complaint says, “The amount Uber and Lyft decide to pay the driver is decoupled from the amount they decide to charge the customer, meaning that it is not a simple percentage of the customer’s payment for the ride.“
“Uber and Lyft pocket the difference between what a customer pays the company and what the company pays a driver for each trip. This amount is known as the “take rate.” The greater the take rate, the more money Uber and Lyft keep from each transaction, and the less drivers take as compensation. To maximize profit, the companies are incentivized to charge passengers as much as possible and pay drivers as little as possible. Neither customers nor drivers are informed of the take rate.”
The court document also says, “Over time, the companies have fine-tuned algorithms that estimate with great specificity the maximum amount an individual rider is willing to pay for a ride at any given time before they switch to another ridesharing app or choose not to take the trip at all. The riders quoted the highest fares are those with either the greatest ability to pay, or the fewest transportation alternatives. The apps can infer this by analyzing how customers respond to fare variation in both experimental and natural settings.” – Source
I have no idea how this lawsuit is going to end. The suit says, “When Lyft and Uber first began to do business, they pocketed a set percentage of the passenger fare—either 20 or 25 percent—on each ride completed.” Those days have sailed.
I’m confident Uber and Lyft would disagree with the suit.
Final Thoughts on Lyft Driver Income and Pay
I can’t think of any more appropriate expression to the question about Lyft driver pay than “it is what it is.”
And what it is is a side hustle. You can begin making money today and generate extra income immediately. You can have income deposited daily, weekly, or even after the ride. So if you don’t like this side hustle money, don’t do it.
I didn’t even touch on the ability to maximize tax deductions for mileage and other expenses to reduce the tax on what you make. That might be another post. If you want a deeper dive into that issue, contact us.
Additionally, you can start and stop whenever you want, there is no set schedule, and you can almost be your own boss.
Your final earnings will be determined by how much you hustle, study to be an intelligent rideshare driver, and execute that plan consistently.
If you can match Damon’s earnings, after expenses, of $215.12 a day, that is damn good and a respectable side hustle.
Ultimately, It’s up to you.