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Friday, September 05, 2014

How ridesharing drivers lose money

Ridesharing drivers are making UberX, Lyft and SideCar extremely successful in the transportation space. These ride app companies give hundreds of thousands of rides per week. In a class above the rest, Uber drivers accept nearly 1 million rides per week and complete hundreds of thousands of trips per week on average.

Nevertheless, ridesharing services are  surging ahead at record levels because riders now have a secondary transit alternative to save money and thus experience a comfortable ride. What is a deeply concerning is that ridesharing drivers assume the high cost of transporting riders. Lets view the scenarios below to get a gist of how ridesharing drivers are losing money.

Real examples: 

Riders request rides. They watch driver travel 20-30 minutes to pick them up. Once the driver arrives at this pick-up address, the rider decides to cancel right at the spot. Drivers figure out that this rider has a free first-time cancellation and decided to use it to impact a driver. Solution is to cancel ride early rather than assume or make an excuse why this trip wasn't cancelled.

Driver arrives at the pickup address. They give rider time to appear. No rider is present. Driver sends a text message to rider to notify them they are waiting and to let them know if they are at another location to inform them of this. Finally, the rider sends a message and tells the driver they are at another location and the pin drop made this mistake. The reality of this situation is that rider can easily input a physical address and cross-streets. Time is wasted. Solution is for rider to look on app and contact driver right way if this address is different than their current location.

No filters are built into the Uber app which UberX drivers use to give rides. Ridesharing driver is on the freeway. A ride request comes from 45 minutes on the other side of the Bay. This driver already knows to let this ride expire. It makes sense to decline this ride request because the rider won't wait 45 minutes to get a ride. Again, the driver receives the same request again and must ignore it. What is happening here is there are no filters and no drivers are accessible in further out areas, so this request is kicked out to the closest driver. Unfortunately, this distant driver is too far away and riders won't wait that long. It is a problem when these rides can cost driver valuable gas, time and potential no-shows. Rider will eventually see a taxi and never cancel this ride request. Solution is to update app with filters and/or not penalize driver's acceptance rate for declining these ride requests.

Pickup times are too long. Drivers travel a few miles and as high as 25+ miles to pick-up passengers. This won't occur with SideCar, they have filters to give drivers flexibility in their service area. Drivers are not getting paid to make these long trips. They lose time and money. If a cancellation should occur, the driver can get stiffed if this is the rider's first-time. $5 won't compensate a driver who loses an hour of time, 4 gallons of gas and loses potential rides during this time frame. Solution is to call riders who are further than 8 miles away and ask if they will be waiting for them.

Riders make drivers wait to get food and/or to get ready. Drivers have been known to wait as long as 30 minutes for a rider because this client sends multiple texts to tell them to wait and they will be out soon. After multiple messages and time lost, the rider finally shows up. This ride only makes the driver $12-13. Almost an hour is lost and the fare is too little to make any real money. Simple solution is for riders to show respect and request their drivers to start rides while they get ready.

Rider is standing at a bus zone. Driver wants to pull over past the bus stop. Rider insists to pick them up at this location. The moment a rider enters this vehicle, they delay the ride to find their address. Meanwhile, a citation officer is capturing a photo of the vehicle and is writing the driver a ticket for $271. In the end, driver loses money and must take on extra shifts to pay for a ticket on a ride they probably made $10-$12 on. Solution is for riders to help drivers avoid this ticket by standing on cross-streets away from hard pick-ups such as Market Street during the busy daytime and to wait near a bus stop and not by the red curb.  

Gas is the number #1 resource for drivers. Some drivers have spent as much as $70+ in one night driving people. It is not cheap to perform ridesharing services. If it weren't for the flexibility, drivers would probably avoid this side job. Rides given on Monday-Wednesday are not paid out until the following Thursday. If there are somehow deposit delays, drivers struggle to get on the road. Gas can also keep a driver off the road.

Wear and tear on vehicles. Ridesharing is abusive to personal vehicles. Vehicles need constant repairs because excessive driving on damaged city wear out vehicles. Potholes destroy axles and eat up tires. Going down large hills deteriorate brakes. Projectile rocks and road debris can damage vehicles. Oil changes are more frequent as a result of daily city driving. All these repairs are extremely expensive. Shops may keep vehicles for days at a time to make money. Auto shops may require unnecessary repairs for drivers to pass inspections. Once a driver is done performing ridesharing services, their vehicle is basically an old heap of metal. Solution is to use two cars on one account to spread the "wear and tear" evenly. It is like rotating and balancing tires.

Getting issued a ticket is an immediate concern for a driver. Bus zone tickets and parking tickets are common. Moving violation tickets are possible. Tickets and citations will ground any driver. Failure to pay tickets and citations can block car registration renewals.

Riders may take items from inside car. It is not all that common, but riders have taken charger cords. If you leave anything valuable in the backseat, you may risk these items being taken. Don't put these items in the trunk because people who load items in there may see them. Best alternative is to leave these items at home or store them on the front seat until a rider requests to sit there.

Ridesharing is not profitable. The wear and tear, gas cost, filter problems, no-shows, time, and other drawbacks may influence earnings. If you enjoy flexibility, social interaction, word-of-mouth marketing, and having fun, ridesharing is for you. Understand that there are potential risks involved and you must be ready to accept these consequences.

Happy Ridesharing!