# Hourly pay or miles/dollars?



## JTull (Oct 15, 2015)

What's the best way to calculate how successful you are? My second day driving I did 128 miles (total dead and active) with an average of 22.5mpg. I
My earnings were $100.22 my time out was 7.5 hours ( turned off the app for 45 minutes for lunch)

So my miles to dollars ratio is 1.28

My hourly wage before expenses is 14.81

I used $12.50 in gas at my mileage and cheap gas here in SC


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## Old Rocker (Aug 20, 2015)

JTull said:


> What's the best way to calculate how successful you are? My second day driving I did 128 miles (total dead and active) with an average of 22.5mpg. I
> My earnings were $100.22 my time out was 7.5 hours ( turned off the app for 45 minutes for lunch)
> 
> So my miles to dollars ratio is 1.28
> ...


What's the dollar per mile fare there?

$15.00 an hour seems a bit low


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## Bob Reynolds (Dec 20, 2014)

JTull said:


> What's the best way to calculate how successful you are? My second day driving I did 128 miles (total dead and active) with an average of 22.5mpg. I
> My earnings were $100.22 my time out was 7.5 hours ( turned off the app for 45 minutes for lunch)
> 
> So my miles to dollars ratio is 1.28
> ...


Here is how you figure this.

Take the 128 miles you drove and multiply it by .575 (IRS mileage rate) and that will give you $73.60. (You can not deduct the gas expense because it is included in the IRS mileage rate). You can deduct tolls, car washes and parking fees because they are not included in the IRS mileage rate.

Take the $73.60 from the $100.22. That will give you a net of $26.62. Take the $26.62 and divide it by 7.5 hours. That gives you an hourly rate of $3.54 per hour.


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## Old Rocker (Aug 20, 2015)

Bob Reynolds said:


> Here is how you figure this.
> 
> Take the 128 miles you drove and multiply it by .575 (IRS mileage rate) and that will give you $73.60. (You can not deduct the gas expense because it is included in the IRS mileage rate). You can deduct tolls, car washes and parking fees because they are not included in the IRS mileage rate.
> 
> Take the $73.60 from the $100.22. That will give you a net of $26.62. Take the $26.62 and divide it by 7.5 hours. That gives you an hourly rate of $3.54 per hour.


This isn't correct.

Most people won't spend the $0.575 in expenses. That amount is a tax deduction, not an expense. The 73.60 isn't an expense, it's the amount he will reduce his earned income by on his Schedule C. In this case he will pay taxes on $26.62, not $100.22.


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## IckyDoody (Sep 18, 2015)

I doubt it costs him $.57 a mile to drive unless he isdriving select. If he is driving a newish economy car then I would estimate $.30 to $.35 per mile.

To the original question. If you do this full time, I think net profit per month is a good metric.

If you are doing it part time, net per hour is probably better. In either case, figure out how much it cost to drive your car each mile. You will need this to calculate your net.


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## Bob Reynolds (Dec 20, 2014)

Old Rocker said:


> This isn't correct.
> 
> Most people won't spend the $0.575 in expenses. That amount is a tax deduction, not an expense. The 73.60 isn't an expense, it's the amount he will reduce his earned income by on his Schedule C. In this case he will pay taxes on $26.62, not $100.22.


You are absolutely not correct. Most people will actually spend more than the 0.575 cents a mile. Most people completely underestimate the cost of a vehicle.

That 57.5 cents a mile represents the COST to drive the vehicle. It is absolutely an expense. It's the amount the IRS says that it COSTS you to operate a vehicle for one mile. It represents the total cost of ownership and not some sort of "carve out". The IRS does not give away anything and they are not giving away deductions in excess of actual operating costs. If you think this number is not correct then you need to take it up with the IRS.

For 2015 AAA says the cost per mile is over 58.5 cents a mile for a large sedan (.71 cents per mile) a mini van (62.5 cents a mile) and an SUV (70.8 cents a mile) . The rate actually did drop in 2015 because fuel prices are down over prior years. AAA says a medium sedan costs (58.1 cents per mile) and a small sedan costs (44.9 cents per mile) So as you can see the 58.5 cents per mile IRS allowance does not even cover the actual costs that AAA says it costs to operate most vehicles. It is about a break even on a medium sedan and you "make" about 14 cents a mile with a small sedan if you only drive 15,000 miles per year. If you drive more miles then 15,000 then your costs are going to be higher because of depreciation, tires, fuel and higher maintenance.

With that being said there are some likely some additional expenses when you drive for Uber that you would not normally have. Costs for body damage or upholstery repair, interior cleaning, etc. would bring up the total costs.

Here is AAA's 2015 driving cost:

http://newsroom.aaa.com/2015/04/annual-cost-operate-vehicle-falls-8698-finds-aaa/

Keep in mind that Uber vehicles are going to have higher costs for depreciation, tires, fuel and maintenance than "normal" vehicles. The costs for license, taxes, registration as well as finance charges will not change.


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## Simon (Jan 4, 2015)

Bob Reynolds said:


> You are absolutely not correct. Most people will actually spend more than the 0.575 cents a mile. Most people completely underestimate the cost of a vehicle.
> 
> That 57.5 cents a mile represents the COST to drive the vehicle. It is absolutely an expense. It's the amount the IRS says that it COSTS you to operate a vehicle for one mile. It represents the total cost of ownership and not some sort of "carve out". The IRS does not give away anything and they are not giving away deductions in excess of actual operating costs. If you think this number is not correct then you need to take it up with the IRS.
> 
> ...


No your wrong.


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## Bob Reynolds (Dec 20, 2014)

Simon said:


> No your wrong.


Cars cost money. Nothing is free. The IRS says it costs 57.5 cents a mile. AAA says it actually costs more.

I'm going to believe the IRS and AAA over any Uber driver. They know about this stuff and they have the numbers and research to back it up.

Uber drivers do not.


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## Simon (Jan 4, 2015)

Bob Reynolds said:


> Cars cost money. Nothing is free. The IRS says it costs 57.5 cents a mile. AAA says it actually costs more.
> 
> I'm going to believe the IRS and AAA over any Uber driver. They know about this stuff and they have the numbers and research to back it up.
> 
> Uber drivers do not.


Let me educate you...

57.5 is the average cost which includes Mercedes Lambos Accords and chevy trucks. Its not specific to his case. In my case my CPM is .59. Please get your information correct so you dont steer new guys the wrong way thanks.


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## Bob Reynolds (Dec 20, 2014)

Simon said:


> Let me educate you...
> 
> 57.5 is the average cost which includes Mercedes Lambos Accords and chevy trucks. Its not specific to his case. In my case my CPM is .59. Please get your information correct so you dont steer new guys the wrong way thanks.


And 57.5 cents is what I correctly stated he needs to figure the cost of his vehicle because that is what the IRS allows (without setting yourself up for an audit and/or a tax re-calculation after an audit)

I also stated that AAA indicates the costs are higher than 57.5 cents. I also listed those higher costs as well as provided a link to the AAA figures.

The lowest cost vehicle that I can find is the Toyota Prius which costs .47 cents per mile to drive on a normal 15,000 mile schedule. If you drive more than 15,000 miles, then the cost per mile will be higher because of increased depreciation, tires, repairs, etc.

Here is the link the the Consumer Reports Prius cost per mile:

http://www.autonews.com/article/201...ius-tops-consumer-reports-cost-per-mile-study

Your actual costs at .59 cents per mile are actually very close to the 57.5 cents per mile figure that I quoted. So there isn't much to argue about there.

Where the problem comes in is when Uber drivers do not understand the real cost of owning and operating a vehicle. Although gas is usually about 1/4 of the total cost, some driver's consider it their only cost.

In my calculation above the driver made $3.54 per hour after figuring the cost for the vehicle. That is absolutely the correct way to figure this.


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## Simon (Jan 4, 2015)

Bob Reynolds said:


> And 57.5 cents is what I correctly stated he needs to figure the cost of his vehicle because that is what the IRS allows (without setting yourself up for an audit and/or a tax re-calculation after an audit)
> 
> I also stated that AAA indicates the costs are higher than 57.5 cents. I also listed those higher costs as well as provided a link to the AAA figures.
> 
> ...


Your wrong.. and your doing Uber wrong. Good day.


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## IckyDoody (Sep 18, 2015)

Bob, it is important to note that AAA calculates its rates based on driving a brand new car. Older cars lose their value at a much slower rate and are therefore much cheaper to drive.

Even a one year old car will see a substantial savings in cost per mile because of the 10 percent value hit you take when you drive a new car off the lot.

Also, cost per mile is a rate. That rate stays the same wether you drive 5k miles or 20k miles. If it costs someone $.40 per mile to drive personal miles, it costs $.40 per mile plus pax wear and tear to drive uber.

I agree that most people, the vast majority in fact, underestimate the cost of driving. Particularly depriciation cost. This ignorance is what allows uber to keep their rates so low.

With that said, I think you are overestimating the cost.

Let me ask you something, what do you think the depreciation cost per mile is for a 2005 vehicle that is worth $4000 and has 100k miles on it?


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## Bob Reynolds (Dec 20, 2014)

IckyDoody said:


> Bob, it is important to note that AAA calculates its rates based on driving a brand new car. Older cars lose their value at a much slower rate and are therefore much cheaper to drive.
> 
> Even a one year old car will see a substantial savings in cost per mile because of the 10 percent value hit you take when you drive a new car off the lot.
> 
> ...


1. Cars cost no matter how new or how old they are. There is no way to get around the cost. I didn't set the costs (the IRS and AAA did based on a 5 year cycle), so I can't agree that I am overestimating the cost. I'm just stating numbers from two sources that would stand up in a court of law. If you, or anyone else, have substantially different numbers that would stand up in a court of law, then I would be interested in seeing them.

2. While the cost per mile does stay the same whether you drive 5k miles or 20k miles, other real costs come into play the more (of less) miles you drive. For example if a Lexus has a $2000 service that is due every 30,000 miles and if you drive 15,000 miles a year then you would pay that $2000 every 2 years. If you drive for Uber you will be paying the $2000 once a year. That in effect is increasing your yearly ownership costs. This also also accelerates the depreciation beyond the standard 15,000 miles per year. So your cost of driving the car, while driving for Uber is going to be more per year than if you drive the same car for personal use. The reason is all of those extra miles you put on the car. You will put between 30,000-50,000 miles a year on your vehicle driving for Uber. That wears the car out faster. So instead of the car lasting 10 years, it might only last 5 years.

3. While an older car does depreciate less, the repair costs (and down time) rise. In many cases it costs more to keep an old car going that to get a new(er) car that has less miles and a warranty. For example if your 10 year old keeps breaking down and spends time in the shop, you have the expense of the repair plus you have the loss of income while the car is in the shop.

I've run fleets and the killer is always the lost income from the down time. No one is making money while the car is sitting in the shop except for the mechanic. Also while the car is in the shop, you are still paying for it. Insurance does not stop. Registration does not stop. If you are making payments they do not stop. So all of those expenses are still going on and the vehicle is not making any money while it is broken down.


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## Simon (Jan 4, 2015)

IckyDoody said:


> Bob, it is important to note that AAA calculates its rates based on driving a brand new car. Older cars lose their value at a much slower rate and are therefore much cheaper to drive.
> 
> Even a one year old car will see a substantial savings in cost per mile because of the 10 percent value hit you take when you drive a new car off the lot.
> 
> ...


Your wasting your time... he is right no matter how wrong he is.


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## IckyDoody (Sep 18, 2015)

I can see that now.


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## JTull (Oct 15, 2015)

Oh hey, thanks for all the replies! since you guys are going back and forth on the depreciation and cost per mile I'll fill you in on ,y whip...

2006 Outback 155k miles, I live in Charleston SC gas is 1.89 a gallon right now. It's a pretty cheap car to operate. Alas I did just have to change some break pads for the uber inspection and the thermostat crapped out last month...


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## Simon (Jan 4, 2015)

JTull said:


> Oh hey, thanks for all the replies! since you guys are going back and forth on the depreciation and cost per mile I'll fill you in on ,y whip...
> 
> 2006 Outback 155k miles, I live in Charleston SC gas is 1.89 a gallon right now. It's a pretty cheap car to operate. Alas I did just have to change some break pads for the uber inspection and the thermostat crapped out last month...


I would say your CPM is about $.29


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