Uber Driver Pay – Sideline Businesses vs Tips

Uber Driver Pay – Sideline Businesses vs Tips

The reference article today talks about Cargo, a small box of snacks and misc. convenience store items that rideshare drivers can place in their vehicles.

Sideline Businesses

Earning additional income on top of passenger fares sounds good but could there be unintended consequences?

Just before I became an Uber driver in April 2016 I read an article about being paid a monthly income to have my car wrapped with an advertisement.  The article said I could earn hundreds of dollars a month depending on how much I drove.

Since I was planning to be an Uber driver and Lyft driver I anticipated driving all over Denver and Boulder, Colorado and I imagined earning the maximum amount from a car wrap advertisement.  I did a Google search and followed up on a couple of offers but never received a response.

Two and a half years later with over 9,000 lifetime trips as an Uber driver and Lyft driver I still do not have any advertisement inside or outside my car.

When I saw the article referenced in this blog post: “An Inside look at Cargo: the convenience store in your friendly neighborhood Uber” once again I thought about earning extra income over my full-time Lyft and Uber driver pay.

I decided this latest path toward potential extra earnings didn’t make sense for me for three reasons:

  1. I could imagine eating the snacks myself and thereby consuming potential profits
  2. Food has expiration dates, I don’t want to manage inventory like a retail store
  3. I drive a Toyota Prius and couldn’t imagine where I would put a tray full of snack choices

With that decision behind me, in the days that followed I continued to think about other “extra income” ideas for rideshare drivers… and I got to thinking about tips.

Do You Tip Uber Drivers

If you’ve ever taken a rideshare trip you’ve probably wondered, “Do you tip Uber drivers?”

In late 2017 Uber added an in-App tipping option and made it easier for passengers to tip their drivers. More importantly, this new feature in the Uber app sent a signal to the rideshare marketplace that tipping drivers IS appropriate.

Uber’s answer to the question, “Are you supposed to tip Uber drivers?”, was a resounding, “Yes”.

Prior to Uber’s integrated tipping option, the tips I received from passengers were so rare I didn’t bother to break them out in my daily earnings spreadsheet.  After the new tipping feature came online I started noticing more passengers tipping on both Uber and Lyft trips.

I was pleased but not terribly surprised to see the frequency of tipping increase… I’d always believed that market-leader Uber’s “tipping not required” policy sent a strong message to all rideshare passengers, whether they were using Uber or Lyft.

The increased tipping inspired me to update my daily earnings spreadsheet to break out in-App and cash tips in separate columns… I wanted to get a meaningful look at the percentage of my overall income that was coming from tips.

I updated my daily earnings spreadsheet starting in February 2018 and by June I had enough data to analyze the results… I found that my tips added, on average, 10% to my Lyft and Uber driver pay.  That’s an average of over $300 additional earnings every month from passenger tips!

You might be thinking: “What’s passenger tipping have to do with selling snacks or putting advertisements in my rideshare vehicle?”

Great question!  I believe that the tips I receive from passengers happen in no small part because of the environment I create in my ridesharing vehicle.

I do a number of things specifically hoping to earn tips:

  • I keep my car clean, comfortable and not cluttered with my personal items
  • I always behave in a polite, professional, and respectful manner to all of my passengers
  • I have bottled water and mints available however I don’t “push” them on every passenger, I do offer them when it makes sense to me.

From years of being a waiter and bartender I know that people tend to tip whatever they tip regardless of the circumstances… a 15% tipper is going to tip 15% and a 20% tipper is going to tip 20%… and I strongly believe there is little that a service person can do to increase a customer’s tip level.

I have seen, however, that a service person can cause the tip level to go down. It’s like the 15 or 20% tip is a given unless the server screws something up… slow service, cold food, rudeness, indifference, etc… any number of things can cause the customer to reduce their tip or not leave a tip at all.

In rideshare driving, I believe that passengers who do tend to tip their drivers might choose not to tip, or might not tip as much if the driver is doing something that most drivers are not doing… like displaying Cargo trays with snacks for sale…

I also think it’s possible that if passengers believe I’m earning significant income from in-car advertisements or selling snacks, it might have a negative effect on tipping… a passenger might be less inclined to tip if my vehicle makes them think I’m earning lots of extra money from sideline businesses… “Why add a tip? This guy’s already making lots of money.”

Why Are We Doing This Rideshare Thing?

I believe it’s important to keep in mind why I have strangers in my car.  Rideshare passengers want to get where they are going, and I want to earn income.

My most important guide for how I manage my rideshare driving passenger experience is thinking about how I want to be treated and what I do (and don’t) want from my rideshare trips.

Personally, I don’t like the way advertisements are being worked into our everyday lives. 

I get it… for decades advertisers had a captive audience for their ads… people spent hours in front of the TV and couldn’t fast-forward past the commercials… now few of us willingly watch commercials unless it’s Superbowl time.

Advertisers are looking for new ways to reach the consumer.

One of their “innovations” is to put electronic advertisements on the back of the front seats in a rideshare vehicle… if I were a passenger being subjected to advertising like this I probably would not add a tip.  Part of my reasoning would be thinking the driver is earning extra income showing advertisements but mostly because I don’t want to be bombarded by advertisements when taking rideshare transportation.

And if a rideshare driver had snacks I wouldn’t buy them… I didn’t order a rideshare trip because I was hungry for a snack.

MAIN TAKEAWAY:  It might be tempting to think about earning extra income on top of your Lyft and Uber driver pay… however, unless the extra income is significant, the potential for reduced passenger tips might mean the overall result is less total income.

Passengers who get turned off because a driver is doing something that most drivers are not doing, besides not tipping, might give the driver a lower Star Rating.

When looking at offers like the one in the referenced article, think through all of the obvious and less obvious consequences… consider income from a sideline business vs tips earned from passengers… rather than looking for “extra income”, in my opinion it makes more sense to put your focus on giving your rideshare passengers the best experience possible… think about how you would like to be treated and what you would want when you take an Uber or Lyft trip as a passenger… that’s how you’ll maximize your Lyft and Uber rideshare pay!

An Inside look at Cargo: the convenience store in your friendly neighborhood Uber

https://www.cnbc.com/2018/09/13/ubers-in-car-convenience-store.html

Uber Driver Pay – Sideline Businesses vs Tips