Analyzing Payout Structures

When I am on ridesharing platforms, I am often excited to be given a very long distance route (will explain in a bit more detail below). It ensures that I am having no downtime and I am able to use highways/interstates. Since the hourly earnings are mostly dependent on the number of miles you are given, long distance rides are able to (you guessed it) provide the most miles per hour (how obvious!). Postmates and delivery services are quite the opposite. The number of deliveries given is the most important, not the distance of the delivery. Being able to stack deliveries in a short distance is the best, surefire way to inrease your earnings.

Let's dig into the details a bit more:

Uber (SF Peninsula, February 2016):

  • $1.50 + $0.15/minute + $0.85/mile

Two examples:

  • 3mi, 14 minutes (traffic, city congestion) = $1.50 + 14 * $0.15 + 3 * $0.85 = $6.15, or an hourly rate of $26.36 before expenses. This assumes that you have zero downtime and the rider is right at your car for the pickup. Very often, you need to drive 5-6 minutes for the pickup, putting the hourly rate before expenses closer to $19.
  • 13 mi, 17 minutes (highway, longer distance) = $1.50 + 17 * $0.15 + 13 * $0.85 = $15.10, or an hourly rate of $53.29 before expenses. Obviously, this has greater expenses than the other ride (I currently cost about $0.18/mi, so the expenses here would cut the hourly rate down to $45.04). Similar to above, this hourly rate is on the high end since it ignores downtime and travel to/from the passenger.

Clearly, though, long distances allow you to rack up the rates faster for ridesharing. Surge pricing INCREASES this difference. Receiving a 2x surge so that you are earning $1.70/mile will assuredly rack up a lot of money if you are on the highway. One of my most efficient drives was a 1.5x early morning trip to SFO that started my day off (lived a few blocks from the pickup). I was able to hop on the highway and drive 36.7 mi in 33 minutes. In 33 minutes, I received $42.32. Even deducting $0.18/mi for the 36.7 mi puts my hourly rate at $64.93.

 

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Postmates on the other hand is more of a volume business. Their structure looks like:

  • $3.10 + $0.12/minute + $0.68/mi

As you can see, both the per-minute AND per-mile rates are lower than ridesharing. The base fee is higher, however, considering deliveries are for longer timeframes than most rides. At $0.12/minute, waiting in line can feel insufferable, since you are being paid at $7.20/hour for any additional minutes. This is why stacking is so important, it allows you to combine the per-minute rides AND to receive multiples of the $3.10 base fee.

Let's go to a few examples, again:

Two examples:

  • 1 delivery, 15mi, 0:55 (0:40 after arriving); $3.10 + 40 * $0.12 + 15 * ($0.68 - $0.23**) = $14.65, hopefully you receive a fat tip because that is one delivery taking up a whole hour. A $4 tip would give you an hourly rate of $20.34.
  • 2 deliveries, 1.5mi each, 0:55 (one came 15 minutes after the first, so they were each delivered in ~0:50); ($3.10 + 1.5 * ($0.68 - $0.23) + 40 * $0.12) x 2 = $8.65 x 2 = $17.30, with the opportunity for two tips. If each of these receive a $4 tip, then your hourly is closer to $27.44.

Conclusion

In short, different platforms incentivize different behaviors. Since the per-mileage payment is worse for Postmates, denser areas will be able to provide better payouts. This is due to the density of the requests and the ability to perform much quicker than long deliveries. Ridesharing, on the other hand, hates traffic. Driving slowly is the fastest way to kill your earnings since the per-minute pay is much worse than the per-mileage pay. Driving 15 mi/hour = $0.325/minute (($0.85 - $0.15) * 15 + 60 * $0.15) while driving 75 mi/hour = $1.025/minute (ignoring the base fees). Try to get those long-distance surges!

**I am including $0.23/mi on Postmates since they do not cover my Metromile per-mile insurance (while my ridesharing platforms do)

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