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TL;DR: What everybody expects: You basically don't make money if you really calculate the whole cost package. I honestly believe that it must be lower than $5/
by erikb 9y ago
TL;DR: What everybody expects: You basically don't make money if you really calculate the whole cost package.
I honestly believe that it must be lower than $5/hour so I'd say even MMM might've forgotten something.
- SilasX 9y agoYeah, there's a quote in the article that I liked, which made the point: "Imagine developing a company specifically to take advantage of people’s ignorance of how expensive it really is to drive their own car. What would this company look like?" (i.e. Uber) With that said, considering how much of the fares they take, and how low their cost of booking is, it seems they could make it work by charging a bit more and taking less of a cut.
- ams6110 9y agoWell it's before tax as far as I could tell, unless Uber withholds. Granted you can probably deduct the IRS standard per-mile expense allowance.
- URSpider94 9y agoUber drivers are contractors, so they’re not going to withhold, but they will issue you a 1099 for the full amount they pay you. It will be up to you to deduct work expenses, either actuals (repairs, depreciation, registration, etc), or per-mile, but not both. You’ll end up paying income tax on something like the $5 per hour net income.
- jaggederest 9y agoI think he's actually wrong. It's definitely higher than marginal $5/hour, it's just not $5 net profit per hour. You take into account the fixed costs of owning and maintenance on the vehicle (which don't entirely vary directly with mileage driven) and it becomes a smart economic choice to drive Uber even if you're "losing money" each hour - because your marginal gross profit is higher than if you were sitting on the couch.
- kunimu 9y agoYou don't need marginalism to explain that making some money doing Uber given fixed costs for your car is better than making no money at all and incurring same or similar costs.
- hyper_reality 9y agoI think you're right, and the article's claim that the drivers' ignorance is being taken advantage of is an unpleasant thing to say. It assumes that the drivers are financially naive, when in fact there are many legitimate reasons why they choose to drive. Many of them are supplementing their income in between other gigs, or enjoy driving more than other jobs available to them. Others have done well out of the referral, bonus schemes and tips that the author mentions. There are various other factors and incentives which the author does not seem to have taken into account. Much as I dislike the corporate practices of Uber, implying that the drivers are miscalculating the cost of driving and are therefore ignorant is a smug overgeneralisation.
- astura 9y agoThat's Mister Money Mustache's writing style. I don't care too much for him myself either but he writes for his audience.
- prawn 9y agoI liked when he talked about being a retiree, but also about being able to work like an executive from the back of a car to the airport.
- astura 9y agohttp://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-vs-the-internet-retirement-police/ http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-...
- redler 9y agoNot to mention, you can't pay your rent with saved future dollars.