What’s The Real Commision That Uber Takes From Drivers?

I created an infographic over at The Rideshare Guy, called, “What’s The Real Commission That Uber Takes From Its Drivers?” and I want to take some time to explain it. One of my contributors, Christian Perea, and I worked on it together and it talks about the real commission that Uber takes. Uber and Lyft actually advertise a 25% commission taken from each fare, but we learned that the advertised 25% commission isn’t always accurate.

Check out the video below then read the transcript to see all of the points I make.

The infographic shows that Uber and Lyft take more than 25% on some rides

Currently, Uber and Lyft take a  25% commission from each fare. Some driver are grandfathered in at the old 20% rate, but most are now at 25%. Our research and infographic show that it’s actually a lot higher.

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The other thing we wanted to highlight with this infographic that is as Uber and Lyft have consistently cut fares each year, that actually means that drivers are going further than ever for the same amount of money while also increasing their expenses. Uber’s commission in these cases is actually going up as fares go down.

The real commission rate after you account for the Booking Fee

When you take into account this little thing called a booking fee, the commission rate is actually a lot higher.

We found that on minimum fare rides in San Francisco, the TNC fee for Uber was basically 42.75%, which is a lot higher than 25%. Here’s what we did: We sampled 37 actual Uber trips in San Francisco.

What the graph shows is your effective commission versus your total fare. This includes the booking fee. The booking fee is supposed to be for safety issues, and the booking fee is paid by the passenger and goes directly to Uber. And then on the remaining amount, you have to pay Uber’s 25% commission, then you get your cut.

That’s why these numbers are gonna be a lot higher, and we’ll explain in the math below. Basically what you can see here is that on fares closer to $5, $10, the effective commission is pretty high. A lot of your fares are in that $5 to $10 range, and in the majority of our 37 fare sample, most are concentrated in the $5 to $10 range. And the commission, in this case, when you take into account the booking fee, is actually 43% to about 33% which is a lot higher than that 25% advertised.

As fares costs increases, the commission starts to go down which makes sense because the booking fee is less of a factor. So over these 37 rides, the median commission was actually 39.01% which is pretty high. I mean, I think a lot of people see Uber and especially on the passenger side and they say, “Oh wow, 20%, 25% commission, that’s great.”

Uber is taking around 39%!

But Uber is actually taking 39% of every single ride. And then when you look at the median fare over 37 rides, in this case, it was actually $8.30. When you take into account that commission of 39%, the driver is left with $5.

We also looked at minimum fares, because minimum fares are sort of the bane of existence for a lot of Uber drivers. So, in Chicago, LA, Miami and Houston, you can see what the minimum fare that a passenger would pay. And then after you take out the booking fee, which varies city by city.

Uber takes a big commission on minimum fares

You can kind see that Uber’s commission goes all the way up to 54% commission in Chicago on a minimum fare. Seven of the 37 rides were minimum fares which sort of lines up with my experience. There’s times and places that you can drive to sort of avoid these minimum fares, but obviously at the end of the day, you don’t know where a passenger is headed. And drivers actually earn less than $10 take-home pay on 31 of the 37 trips.

Driving further for less money

This section covers the distance required to earn $10 of fares after Uber cuts prices. And you guys know Uber loves to cut prices every year and it actually happens to fall on my birthday, January 9th.

In 2012, in order for drivers to make $10, all they had to go was 1.13 miles. And you can actually see the prices right here which is great. Short rides were making drivers a lot of money.

What this chart really shows is that rates went from $3.75 a mile to $2.75 a mile. Now, drivers have to go almost double the distance, all the way up to 2.36 miles which is pretty far.

And you can kind of see as it’s progressed from 2014, 2015, 2016, all the way up to 2016, drivers now have to do four miles or even 4.71 miles on UberPOOL in order to make the same $10 that they made back in 2012. That’s really what we wanted to highlight. In 2013 drivers only had to do 2.36 miles to make $10. And now in 2016, drivers have to travel 4.71 miles to make $10 with UberPOOL.

Uber announced that 50% of their rides in San Francisco are UberPOOL. I think that’s definitely an important stat. Drivers are basically doing double the work, driving double the distance, and on some fares the TNCs actually get 32.6% of the fare.

When fares are lower, drivers pay the difference

Our conclusion with all of this is that TNCs really benefit from lower prices because the number of rides that they’re processing increases while they’re also getting a higher portion of each fare.

If you look at 2.36 miles compared to 4.71 miles, your expenses actually just doubled. That’s a big thing to take into consideration that I think Uber misses out on a lot when they talk about lowering fares, increasing demand and things like that.

When fares are lower, drivers pay the difference. Hopefully you guys enjoyed this infographic. If you guys have a site or anything like that you want to embed this infographic on your own website, all you have to do is highlight that, copy and paste into your HTML on your website. And you can actually have this infographic and share it on your site. You have my permission.

So that’s the takeaway. If you guys want to take a further look at this infographic, I’ll definitely leave a link below. And if you have any questions, don’t hesitate to reach out. Thanks for watching. Feel free to like, comment, subscribe to the channel. Take care.

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