# AAA Calculated Cost/Mile: Why So High?



## EcoSLC (Sep 24, 2015)

http://publicaffairsresources.aaa.biz/resources/yourdrivingcosts/index.html

I see back and forth from people here about how much it costs per mile, or should cost per mile, to operate vehicles for Uber, taxi, limo, etc. AAA says it's $0.582/mile for a small sedan driving 10,000 miles this year. It only goes up from there, to a ridiculously high composite average of $0.758/mi (which is, incidentally, just over 75% of gross per-mile earnings in my Uber market). But why is this number so high? Seems like they're dramatically overestimating something here.

Edit: Misplaced decimal point.


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## Uberselectguy (Oct 16, 2015)

Read my earlier posts. I paid a CPA to do the forensic costs.

It is primarily due to driving your car into unusually high miles, higher maintenance costs. Uber had these numbers all along, they just knew you wouldn't figure it out yourself.

The IRS does not hand out money, their calculations at .58 are extremely conservative and don't account for the extremes of Rideshare driving.

You are in a no win situation. The nicer, newer the car you drive the worse it gets.


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## EcoSLC (Sep 24, 2015)

Got a link for those earlier posts?

I'm probably lazy.


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## Uberselectguy (Oct 16, 2015)

Easier yet, this is what I wrote. These numbers were calculated to the penny, I'm involved in a transportation start up and we presented these numbers for VC funding. I offer this data for your use.

Or, simply you can use these numbers that have been very carefully researched. The research was done at my expense in setting up my company. Statistical values are derived by databases provided by KBB.COM

You drive a ...

2014-2015 vehicle with a mean price of $32k Gross revenue minus 0.72 per total miles

2012 - 2013 vehicle with a mean price of $22,000. Gross revenue minus .67 per total miles.

2008 - 2012 vehicle with mean price of $17,000. Gross revenues minus .59 per total miles

2005 - 2007 vehicle with mean price of $10500. Gross revenues minus .52 per total miles

2000 - 2005 vehicle with mean price of $6750. Gross revenues minus .47 per total miles

Mean price is factored at + / - 20%. Of acquisition price.

Total miles are from start to finish of your shift, downtime included.

These numbers include regular grade gasoline at $2.10 per gallon, depreciation at 25000 miles per year, higher insurance premiums due to ride share policy, tire, oil, washes and brakes.

These numbers ARE NOT inclusive of high end vehicles such as Mercedes, Jaguar, BMW, ect. These numbers are for generic, mid cost vehicles.

These numbers assume financing at 4.0% over 60 months, simple interest.

IM SHARING IN THE HOPES YOU CAN BETTER EVALUATE YOUR PROFITS.


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## Davesway10 (Aug 7, 2015)

So let me get this right, what you are saying is for 2014-2015 vehicle your costs are .72 per mile. All in.

If this is the case, then, do you offset this number by the 57.5 per mile that the IRS allows you to deduct per mile from taxable earnings.


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## Fuzzyelvis (Dec 7, 2014)

Davesway10 said:


> So let me get this right, what you are saying is for 2014-2015 vehicle your costs are .72 per mile. All in.
> 
> If this is the case, then, do you offset this number by the 57.5 per mile that the IRS allows you to deduct per mile from taxable earnings.


If you mean what I think you do by offset then no. If the IRS gave a tax CREDIT then yes. But it's not a credit, it's a deduction.

You could argue to offset it by the tax savings generated by the deduction I suppose. But that would vary by person.


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## Davesway10 (Aug 7, 2015)

So, If you pay $10,000 per year in expenses or you pay $10,000 per year in taxes what is the difference. $10,000 out is still $10,000 out. I guess I just don't understand the reluctance of people to appreciate the value of that deduction. It is significant. That $10,000 figure is arbitrary by the way.


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## Davesway10 (Aug 7, 2015)

Part of the reason why I am so resistant to some of these .xx per mile figures that folks post up as direct losses is because for me specifically I already had most of these costs Pre-UBER. Meaning, I already had the car payment - insurance payment - my car was going to depreciate no matter what, UBER increases that depreciation for me by about 25%. I think that if you are a full time/part time driver depending solely on this income and you made investments exclusively for and because of UBER then these figures are much more applicable. I'm neither of these, I'm more of a spare time driver and yes I understand I am incurring costs as a result just not to this degree.


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## Davesway10 (Aug 7, 2015)

Also, as a side note. Pre-UBER I ate the entire depreciation with no remuneration , now I offset that with earnings the I can almost fully deduct and pay no taxes on.


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## EcoSLC (Sep 24, 2015)

Yes, just like when calculating your taxes, you have to consider that personal auto insurance is something you need just to drive to the grocery store. Of course, you're using commercial insurance, right? Right?

...Anyway, yeah. If you have a monthly or annual expense that covers both personal and business use, you need to divide the cost between the two based on percentage of use. If you're only ridesharing part-time, things like insurance and registration should be less of an effect on your calculated costs per mile. However, putting more miles on the vehicle per year also spreads out the cost per mile from fixed annual expenses over more total miles, increasing net income per mile further. AAA's costs per mile go down a bit for vehicles operating a high number of miles annually.

The numbers still seem way too high to me, though. I'm looking at getting a Mazda Millenia for pizza delivery, and it has a bit over 80,000 miles on it. If AAA's $0.582/mile figure for this year was applied to all those miles, that would imply the vehicle has thus far cost its previous owners a total of $46,560. I'm not sure I can buy that figure.


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## Bob Reynolds (Dec 20, 2014)

Davesway10 said:


> Also, as a side note. Pre-UBER I ate the entire depreciation with no remuneration , now I offset that with earnings the I can almost fully deduct and pay no taxes on.


So now you subsidize Uber and the riders and you "donate" your vehicle without getting the actual costs of the vehicle back to you.

Would you rent out an extra room in your house for $50 a month because you are already paying the mortgage payment, taxes and insurance? After all it's $50 more a month than you had.


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## itsablackmarket (May 12, 2015)

Uberselectguy said:


> Easier yet, this is what I wrote. These numbers were calculated to the penny, I'm involved in a transportation start up and we presented these numbers for VC funding. I offer this data for your use.
> 
> Or, simply you can use these numbers that have been very carefully researched. The research was done at my expense in setting up my company. Statistical values are derived by databases provided by KBB.COM
> 
> ...


Ok so how are you convincing VC's to invest in a company that's competing with people who are doing charity work while thinking they're making money? Uber is dom/sub role playing. That's all it is. Let your investors know that.


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## MKEUber (Aug 20, 2014)

EcoSLC said:


> *AAA Calculated Cost/Mile: Why So High?*


Because owning a car is expensive man. Most people don't notice because the costs are spread out over a period of several years. If you take the total cost of your car over it's lifetime to include all maintenance costs, gas, tires, car washes, interest on your loan, etc., then divide it by the miles you drove it, it will come out very close to AAA's numbers.


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## Davesway10 (Aug 7, 2015)

Bob Reynolds said:


> So now you subsidize Uber and the riders and you "donate" your vehicle without getting the actual costs of the vehicle back to you.
> 
> Would you rent out an extra room in your house for $50 a month because you are already paying the mortgage payment, taxes and insurance? After all it's $50 more a month than you had.


Without UBER my car still costs me .xx per mile. No matter what. So yeah, if I can utilize a tool I already possess and create revenue at the same time. I'm going to.


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## MKEUber (Aug 20, 2014)

Davesway10 said:


> Without UBER my car still costs me .xx per mile. No matter what. So yeah, if I can utilize a tool I already possess and create revenue at the same time. I'm going to.


Except you left out that oil changes, new tires, and other maintenance are going to be coming at you at a much more frequent rate because you are driving for Uber. Ohh., and the value of your car will decrease at a much faster rate too with all the miles you are putting on it. Also, you;ll need to get a new car sooner then if you weren't putting all these miles on it.

So unless you were just going to be driving aimlessly putting city miles on your car every night, your costs of car ownership are much higher driving for Uber than if you weren't.


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## Sacto Burbs (Dec 28, 2014)

I've learned with Uber that my personal car always costs me per mile - I just pretend it doesn't

Gas-per mile
Insurance- MetroMile so per mile
Maintenance-per mile

"I have a car payment" - means my car value is depreciating per mile, payment or not.

"I need to fill the tank" - means I just used x gallons that took me y miles.

"I have to fix my transmission"- normal per mile cost of wear and tear

When we start understanding that ALL car use is per mile and not "well I've already paid for it" a beneficent glow will infuse us and we will become - accounting nerds


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## Davesway10 (Aug 7, 2015)

Yes, you most certainly accelerate it. Depreciation is brutal no matter what you do with your car. Based off of KBB true cost to own data my car at the my current usage will depreciate about 25% more than a "normal usage" vehicle will depreciate.


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## Uberselectguy (Oct 16, 2015)

Davesway10 said:


> Also, as a side note. Pre-UBER I ate the entire depreciation with no remuneration , now I offset that with earnings the I can almost fully deduct and pay no taxes on.


You are trying to justify the uber activity but you lack foresight.

Before Uber, you drove your car and did not put nearly as many miles on it as you do now. When you sell the car, earlier than planned because of the high mileage accumulation, you will be hit harder with depreciation. You bought the car for x, y is depreciation. X - Y is the impact. In your case, Y is going to be higher.

It's called foresight. Get yourself in the loop where you can prepare now for the actual cost of operation under the uber platform. You may see it much less profitable. Much, much less.

Of course, if you are using a 10 year old pos, fully depreciated your profit picture is different.


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## Uberselectguy (Oct 16, 2015)

Bob Reynolds said:


> So now you subsidize Uber and the riders and you "donate" your vehicle without getting the actual costs of the vehicle back to you.
> 
> Would you rent out an extra room in your house for $50 a month because you are already paying the mortgage payment, taxes and insurance? After all it's $50 more a month than you had.


It's more like this. Rent out a room for $50 a month in a home you already own. But, as a condition of that rent agreement, you allow the renter to trash your carpets, your wood floors, landscaping and tile work.

Then you sell the house after collecting $1200. Your house would have been worth $400,000. After the damage its worth $300,000.

$1200 collected, $100,000 lost. 8000% NEGATIVE return. I do better with penny stocks, hit and miss.


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## MKEUber (Aug 20, 2014)

Uberselectguy said:


> Of course, if you are using a 10 year old pos, fully depreciated your profit picture is different.


Still, even with a 10 year old POS (which you see a lot more Uber drivers using these days) you are going to come up to the end of that car's life a lot faster than if you wern't driving Uber.


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## Uberselectguy (Oct 16, 2015)

Davesway10 said:


> So let me get this right, what you are saying is for 2014-2015 vehicle your costs are .72 per mile. All in.
> 
> If this is the case, then, do you offset this number by the 57.5 per mile that the IRS allows you to deduct per mile from taxable earnings.


No, the $0.72 is not offset by the $0.58 allowed by the IRS. Rather instead, you are limited to your vehicle expense so that the $0.24 is a pure non itemized loss.

The .72 takes into account average expenses. If you are in a higher insurance bracket, that would have to be added, as an example.

The main thing is, when you are driving for the average of $ 0.92 per mile for Uber, you must subtract the .72 for GROSS profit. Now you are driving at .20 gross per mile. Drive an additional 20,000 miles for Uber, you make a gross profit of $4000.00
Now subtract out any unforeseen costs such as collision deductibles. Subtract self employment taxes of $400.

Simply and using some round outs, you have an approx net of $3200. Takes about 660 hours to dive that 20,000 miles, under typical city traffic, assuming you can average around 30 mph. It all works out to just over $4.75 an hour.

Not one independent contractor trade works for half minimum wage. Not even migrant farm workers.

These are numbers derived from cost accounting. These are the numbers that Uber knows few will ever get, let alone understand. Sure, there are exceptions to this rule. But few and for those that tell the truth, fewer still.


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## Uberselectguy (Oct 16, 2015)

Davesway10 said:


> So, If you pay $10,000 per year in expenses or you pay $10,000 per year in taxes what is the difference. $10,000 out is still $10,000 out. I guess I just don't understand the reluctance of people to appreciate the value of that deduction. It is significant. That $10,000 figure is arbitrary by the way.


The singular most misunderstood component of the Uber business model is time valuation. Basically, what is your time worth? For most Uber drivers, their working labor value per hour is $4.80.

This is why they classify you as indies. If all were classified as employees, it would crush the model and Uber would become worthless overnight. Even just minimum wage would crush Uber.

But for as long as drivers don't value their time, Uber will move forward. You are actually better off at McDonalds.


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## Excel90 (Oct 26, 2015)

Eliminate car cleaning expenses: 

Pick up by hand the bigger pieces of trash in car, shake out the floor mats, wash windows w/ free soap/water when gassing up, and use a friend's garden hose to wash down your car. If really need to can stop by t hose $1-$2 outdoor vacuum stations at gas stations to vacuum out the car. I usually drive at night so exterior of car doesn't have to be as squeaky clean b/c its dark outside and many riders have been drinking and don't notice/don't care. You just eliminated your cleaning costs.


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## Excel90 (Oct 26, 2015)

Uberselectguy said:


> No, the $0.72 is not offset by the $0.58 allowed by the IRS. Rather instead, you are limited to your vehicle expense so that the $0.24 is a pure non itemized loss.
> 
> The .72 takes into account average expenses. If you are in a higher insurance bracket, that would have to be added, as an example.
> 
> ...


I get what you're saying and you may be right on all this(?). For me personally, I do Uber as PT job. Whenever I'd be at home just watching TV or laying around, I can go out and make some extra $$$. Maybe its only $5/hr. But I have no boss, no quotas, no micromanaged culture, no politics, and really almost no bullshit to deal with. I can take a 5 min break or a 5hr break. I have total and complete decision making authority and freedom. I also learn from riders about good restaurants, bars, and other things. I've had great conversations with many riders and learned a lot about local things and even travellers from other states. I've also learned my area pretty well the backstreets, shortcuts, etc.

I get to meet new people and make connections. The area I drive in the majority of riders are pretty friendly and cool, even the drunk ones (for most part). I'm making cash giving rides. I'd love to make more and to see improvements, so keep at this information campaign and pushing the envelope by all means b/c we probably are underpaid...but if I'm making a profit in my TV time, its a (small) win for me.


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## Sacto Burbs (Dec 28, 2014)

Uberselectguy - can you say "opportunity cost" ?


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## EcoSLC (Sep 24, 2015)

Excel90 said:


> I get what you're saying and you may be right on all this(?). For me personally, I do Uber as PT job. Whenever I'd be at home just watching TV or laying around, I can go out and make some extra $$$. Maybe its only $5/hr. But I have no boss, no quotas, no micromanaged culture, no politics, and really almost no bullshit to deal with. I can take a 5 min break or a 5hr break. I have total and complete decision making authority and freedom. I also learn from riders about good restaurants, bars, and other things. I've had great conversations with many riders and learned a lot about local things and even travellers from other states. I've also learned my area pretty well the backstreets, shortcuts, etc.
> 
> I get to meet new people and make connections. The area I drive in the majority of riders are pretty friendly and cool, even the drunk ones (for most part). I'm making cash giving rides. I'd love to make more and to see improvements, so keep at this information campaign and pushing the envelope by all means b/c we probably are underpaid...but if I'm making a profit in my TV time, its a (small) win for me.


But you're not making a profit in your TV time. You're sacrificing (losing) your TV time in exchange for driving around in your car for pennies on the mile. If you're actually out in your car away from home while waiting for pings, instead of waiting for pings while watching TV at home, you're losing even more TV time. Either way, you'd be financially better off sacrificing TV time to work a part-time job as an actual, minimum-wage-guaranteed employee, with no self-employment tax even.


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## Sacto Burbs (Dec 28, 2014)

I only lose money if I can get someone to pay me to watch TV. I only charge $2 an hour. i have Paypal.


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## EcoSLC (Sep 24, 2015)

That's my point. You're not getting paid during TV time, whether Uber is on or off. If you leave home because of a ping, it's no longer TV time. Now it's Decided to Do Something Else time. At that point it just boils down to how you value your personal life and how you value supplemental income. If I am going to sacrifice TV time for Make Travis Rich time, there better be something in it for me that I consider better than working at McD's part time. That varies per individual and even per specific day.


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## Simon (Jan 4, 2015)

First Uber is not a full time job. It cannot shoulder the benefits a full time job offers and still be profitable. No matter what market your in. 

Second those CPMs are on the high side (triple a averages the cost over several models prius cpm is lower than a Buick Regal for example)

Third never look at this as an hourly job. Its a profit based business. Part or full time your selling your cars value a mile at a time hopefully at a profit. 

There are milage cost calulators online. Figure your own cpm. This thread has about 60% useful information and the rest is misleading. 

Anyone who thinks 57.5 per mile write off is free money, let an accountant do your taxes. Your doing your taxes wrong. 

Out


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## Fuzzyelvis (Dec 7, 2014)

Uberselectguy said:


> It's more like this. Rent out a room for $50 a month in a home you already own. But, as a condition of that rent agreement, you allow the renter to trash your carpets, your wood floors, landscaping and tile work.
> 
> Then you sell the house after collecting $1200. Your house would have been worth $400,000. After the damage its worth $300,000.
> 
> $1200 collected, $100,000 lost. 8000% NEGATIVE return. I do better with penny stocks, hit and miss.


A bit extreme but you explained it beautifully.


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## Muki (Oct 15, 2015)

Davesway10 said:


> Without UBER my car still costs me .xx per mile. No matter what. So yeah, if I can utilize a tool I already possess and create revenue at the same time. I'm going to.


That's why you calculate everything on a per mile basis. Normally, my car gets around 19-20mpg in city driving. But when I'm Ubering that drops to about 15-16mpg. I'm able to then do the math and figure that gas it costing me about $0.13/mile while Ubering. Same with tires. If I pay $100 a tire and the life of those tires are 40,000mi, then it's costing me $0.01/mi. That is how you separate out your Uber driving cost from your normal driving cost.


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## Muki (Oct 15, 2015)

Simon said:


> First Uber is not a full time job. It cannot shoulder the benefits a full time job offers and still be profitable. No matter what market your in.
> 
> Second those CPMs are on the high side (triple a averages the cost over several models prius cpm is lower than a Buick Regal for example)
> 
> ...


Of course you're selling your time. The car isn't driving itself. You had to drive it around for 8 hours and that's a lost 8 hour opportunity cost to be doing something more profitable with that time. Your time is worth money as well.


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## Oscar Levant (Aug 15, 2014)

EcoSLC said:


> http://publicaffairsresources.aaa.biz/resources/yourdrivingcosts/index.html
> 
> I see back and forth from people here about how much it costs per mile, or should cost per mile, to operate vehicles for Uber, taxi, limo, etc. AAA says it's $0.582/mile for a small sedan driving 10,000 miles this year. It only goes up from there, to a ridiculously high composite average of $0.758/mi (which is, incidentally, just over 75% of gross per-mile earnings in my Uber market). But why is this number so high? Seems like they're dramatically overestimating something here.
> 
> Edit: Misplaced decimal point.


accelerated depreciation is the big reason and it's about right


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## Davesway10 (Aug 7, 2015)

Muki said:


> That's why you calculate everything on a per mile basis. Normally, my car gets around 19-20mpg in city driving. But when I'm Ubering that drops to about 15-16mpg. I'm able to then do the math and figure that gas it costing me about $0.13/mile while Ubering. Same with tires. If I pay $100 a tire and the life of those tires are 40,000mi, then it's costing me $0.01/mi. That is how you separate out your Uber driving cost from your normal driving cost.


I Fully understand my costs, that's not what I was talking about.


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## EcoSLC (Sep 24, 2015)

Muki said:


> Of course you're selling your time. The car isn't driving itself. You had to drive it around for 8 hours and that's a lost 8 hour opportunity cost to be doing something more profitable with that time. Your time is worth money as well.


Ben Franklin explained that opportunity cost with a simple three-word phrase. "Time is money".


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## SCdave (Jun 27, 2014)

Uberselectguy said:


> No, the $0.72 is not offset by the $0.58 allowed by the IRS. Rather instead, you are limited to your vehicle expense so that the $0.24 is a pure non itemized loss.
> 
> The .72 takes into account average expenses. If you are in a higher insurance bracket, that would have to be added, as an example.
> 
> ...


This is one reason why I feel that OnDemand Businesses should have to state Net Profits when recruiting workers.

We (as in society) do not have to go crazy with regulations that hinder business growth and competition that provides value/choices to the consumer, and still have basic OnDemand Workforce rules that provide a means for the all workers/independent contractors to fully understand what they are getting into.

_Uber (any TNC) MUST provide a Net Profit model by market, platform, and vehicle (or vehicle type). Too difficult to do? Nope, they've already done this and use this to their advantage when making their presentation to their investors. _

Anyone think Uber doesn't understand Net Profits for each Driver by Market, Platform, and vehicle already? Net Profit Models should be disclosed to ALL Drivers both during the Recruit Phase and then periodically to all Drivers using the Uber Partner App

Not a request, or it's the right thing to do, but a OnDemand Workplace law.

Don't want to post Net Profit Models for OnDemand Worker using your App as an Independent Contractor. No problem, it should then be called paying a fine, possible jail time, and then complying to legally make OnDemand Workers using your App Independent Contractors or hiring Employees as Drivers to continue operations.
Force Uber's hand to disclose Net Profits Models by market, platform, and vehicle.

Oh, Net Profit Models must be verified by an Accounting Firm (or non-profit) with no ties to Uber or any Uber Investor.


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## BostonBarry (Aug 31, 2015)

EcoSLC said:


> http://publicaffairsresources.aaa.biz/resources/yourdrivingcosts/index.html
> 
> I see back and forth from people here about how much it costs per mile, or should cost per mile, to operate vehicles for Uber, taxi, limo, etc. AAA says it's $0.582/mile for a small sedan driving 10,000 miles this year. It only goes up from there, to a ridiculously high composite average of $0.758/mi (which is, incidentally, just over 75% of gross per-mile earnings in my Uber market). But why is this number so high? Seems like they're dramatically overestimating something here.
> 
> Edit: Misplaced decimal point.


Read the fine print in the article and you'll see why this and the IRS deductions are terrible ways to gauge your expenses. Fuel was calculated at $2.85/gallon, I pay under $2.00. Depreciation is calculated based on new vehicle purchase price minus value at end of 5 years. Anyone using a new car is out of their mind and deserves the loss. They also calculate things like registration, taxes, license, etc. These are all expenses you have without ridesharing. You get to deduct some of them since you use your car for business but they are NOT a cost of doing business. Anyone who uses these averages to calculate their personal expense is doing this whole business model WRONG. Nobody but you can come close to estimating the cost of running your vehicle.

Also note the higher the miles/year the LOWER the cost per mile. Because costs don't accrue in direct correlation to mileage. The more you drive a year, the less each mile cost you.


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## Uberselectguy (Oct 16, 2015)

SCdave said:


> This is one reason why I feel that OnDemand Businesses should have to state Net Profits when recruiting workers.
> 
> We (as in society) do not have to go crazy with regulations that hinder business growth and competition that provides value/choices to the consumer, and still have basic OnDemand Workforce rules that provide a means for the all workers/independent contractors to fully understand what they are getting into.
> 
> ...


Insightful and very good points,,

You describe the franchise system. Highly regulated and transparent. If uber were to operate under the same rule set whereby every "partner" we're to see the forensic profit model, Uber would never be able to recruit drivers.

Slowly but surely, more and more drivers speak out and broadcast the real picture. More and more drivers fall off. What uber didn't count on was the much higher turnover rate, and the huge ad budget to recruit more drivers.

The VC partners must look at the budget to recruit and work out that it would pay ten fold to divert that budget to drivers by reducing commissions and fees. More driver earnings allows Uber to partner with the best drivers since they are motivated to drive full time all the while earning a reasonable wage after expenses.

Those display ads in print and Internet media, those 30 second TV ads cost tens of millions of dollars each year. Money better spent on the sole mechanism that "drives" uber. Better driver earnings sells itself, no ads needed.


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## Uberselectguy (Oct 16, 2015)

Excel90 said:


> I get what you're saying and you may be right on all this(?). For me personally, I do Uber as PT job. Whenever I'd be at home just watching TV or laying around, I can go out and make some extra $$$. Maybe its only $5/hr. But I have no boss, no quotas, no micromanaged culture, no politics, and really almost no bullshit to deal with. I can take a 5 min break or a 5hr break. I have total and complete decision making authority and freedom. I also learn from riders about good restaurants, bars, and other things. I've had great conversations with many riders and learned a lot about local things and even travellers from other states. I've also learned my area pretty well the backstreets, shortcuts, etc.
> 
> I get to meet new people and make connections. The area I drive in the majority of riders are pretty friendly and cool, even the drunk ones (for most part). I'm making cash giving rides. I'd love to make more and to see improvements, so keep at this information campaign and pushing the envelope by all means b/c we probably are underpaid...but if I'm making a profit in my TV time, its a (small) win for me.


Whether you do this PT or FT, expenses are what they are. It's all about profit loss.

You can justify your profit ( however small ) by explaining the social aspects of driving. I play golf with others, very social. At least with golf I know up front what I'm losing and chalk it off to being just a "game". Can't do that with Uber, it's not a game.


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## SCdave (Jun 27, 2014)

Uberselectguy said:


> Insightful and very good points,,
> 
> You describe the franchise system. Highly regulated and transparent. If uber were to operate under the same rule set whereby every "partner" we're to see the forensic profit model, Uber would never be able to recruit drivers.
> 
> ...


I know what you're saying but don't believe Uber would be out of business. Uber would not have grown as fast but still be in business (probably).

Also, if Uber needed more incentives to recruit Independent Contractors and Net Profit Model wasn't enough, then there are other options. Uber could then offer the Driver Partner (as an Independent Contractor) private equity as compensation.

Wait...what? Not enough profit so the start-up offers private equity?

Yes, yes, yes....

_p.s. As a collective, each Uber Driver is as important, or more so, than any big VC investor in Uber._


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## Simon (Jan 4, 2015)

Muki said:


> Of course you're selling your time. The car isn't driving itself. You had to drive it around for 8 hours and that's a lost 8 hour opportunity cost to be doing something more profitable with that time. Your time is worth money as well.


Your profit margins pay you for your time.


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## Muki (Oct 15, 2015)

BostonBarry said:


> Read the fine print in the article and you'll see why this and the IRS deductions are terrible ways to gauge your expenses. Fuel was calculated at
> 
> Also note the higher the miles/year the LOWER the cost per mile. Because costs don't accrue in direct correlation to mileage. The more you drive a year, the less each mile cost you.


I'm a bit confused. Can you give an example of what you mean here? My reasoning(perhaps wrong) is that there is a fixed cost per mile determined by fuel costs, routine/non-routine maintenance, and depreciation that is tied to how much driving you are doing and this can be calculated on a per mile basis. Why would driving more miles reduce my vehicle cost per mile?


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## BostonBarry (Aug 31, 2015)

Fuel varies year round because oil prices fluctuate. When I started driving it was around $2.30/gal now it is $1.95. Also, time of year and region can influence fuel because of air conditioning usage or having to leave car running to heat yourself while waiting for ping. My $0.15/mile fuel cost is the overall money spent on fuel divided by business miles.

More miles can reduce some costs because they have a more fixed cost not related to mileage. Examples are registration, insurance, taxes, light bulbs, emergency supplies, etc. When these are first purchased their impact on bottom line is high but when prorated over the next 20, 30, 40 thousand miles, their cost per mile is low.

The most important takeaway from the AAA article is the depreciation factor. They specifically say this is calculated based on buying a new vehicle and what the vehicle will be worth at the end of 5 years. The older the car, the lesser the deprecition. This is why my 08 van bought with 75k miles has only lost $700 in value over 20k business miles. Also note the info on last page, minivans cost $0.52/mile when driven 20k miles per year whereas large sedans depreciate $0.59, since minivans qualify for XL/Plus, they are clearly the best choice IMO.


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## Einstein (Oct 10, 2015)

Uberselectguy said:


> If uber were to operate under the [same] rule set whereby every "partner" we're to see the forensic profit model, *Uber would never be able to recruit drivers.....*
> 
> The VC partners must look at the budget to recruit and work out that it would pay ten fold to divert that budget to drivers by reducing commissions and fees.....
> 
> ...


Because it is a scam. As sure as the best scams in history.

It will only change when the ceo departs.


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## Muki (Oct 15, 2015)

BostonBarry said:


> More miles can reduce some costs because they have a more fixed cost not related to mileage. Examples are registration, insurance, taxes, light bulbs, emergency supplies, etc. When these are first purchased their impact on bottom line is high but when prorated over the next 20, 30, 40 thousand miles, their cost per mile is low.


I see what you mean now. Since I'm using my only automobile which I also use for personal use, I don't include these type of costs, things like registration, insurance(I don't have commercial or flex), bulbs, etc because these are expenses that I would incur regardless. I would only include them if I bought a second car strictly for Uber use. The only things I factor in are the additional costs of gas, tires, oil changes, planned/unplanned maintenance, depreciation.



> The most important takeaway from the AAA article is the depreciation factor. They specifically say this is calculated based on buying a new vehicle and what the vehicle will be worth at the end of 5 years. The older the car, the lesser the deprecition. This is why my 08 van bought with 75k miles has only lost $700 in value over 20k business miles. Also note the info on last page, minivans cost $0.52/mile when driven 20k miles per year whereas large sedans depreciate $0.59, since minivans qualify for XL/Plus, they are clearly the best choice IMO.


Good call on the van. I can't believe there are people using new cars for Uber.


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## BostonBarry (Aug 31, 2015)

Yes, that is the right thing to do. You can use those costs to determine your tax liability, for sure. But they aren't really the cost of adding business miles. To get a true picture of my personal vs business cost of operation and ownership I will take all costs for vehicle and divide by total miles, then assign a percentage of those costs based on the percentage of miles for each category. So if my miles are 90% business, then 90% of my registration was a business expense, etc. etc.


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