To UBER or no to UBER?
UBER car service: To UBER or not to UBER?
So you have decided that you want to make some extra cash by becoming a UBER car service driver. before we will try to understand all the financial implications that’re involve in becoming a UBER car service driver, let’s first understand what is it all about.
UBER is an APP based service that connects drivers to riders. the service work in a way that you have to register on their website and all the transaction take place online – from the bank transfer to the payment to the driver. UBER is not a shared drive, it is a service that try to compete with the TAXI sector, by sending you a private style TAXI, that will take you to your destination. the innovation from UBER is that they allow you to choose the car, it is very convenient, no need of cash, you can give feedback, you know exactly what the price is before you begin the fare, they send you a driver that is close to you, and you can even split the ride to reduce costs. all those things that annoy you with taking a TAXI, UBER found a way to overcome and create added value.
To UBER or not to UBER?
So now we get to the financial side of the deal for the driver, and by financial we mean your personal P&L from your UBER car service efforts.
here are the costs involve in becoming a UBER car service driver:
As you might know, an insurance policy is a very detail legal documents, the reason for that is to help the insurance company (not you) to avoid payment if you breach any of the conditions involving with having the insurance. (that’s ok as it’s an industry wide thing). when you decide to take an extra job as UBER car service driver for UBER, that means that you will spend more time on the road, and your chances of getting in an accident as a result of that rise, so your risk to the insurance company will incur extra cost in policy for you.
If you drive your car let’s assume 5,000 KM more as a result of being on the road driving and taking people for money, your car value will be affected from that. you see the more KM your car has made, the less value remain when you want to sell it to a private owner. this cost is very hard to measure, but you must consider it as UBER expect you to drive your own car, rather than a taxi that belong to the taxi firm.
The same as for depreciation, if you drive your car more, then the interval for maintenance are more frequent, meaning you will incur more cost taking care of your car, you will probably need to take the car to a cleaning service as well, and that cost should be on your mind as well when “going UBER”.
The more time you are on the road, you are more likely to get into an accident and get physically hurt. the accident is a numbers game, we all try desperately to avoid, by telling our self it won’t happen to me, but statistics says otherwise. so the rule of thumb is the more time you are on the road the bigger the chance to become one of those statistics, and that usually involve costs as well.
Any car needs fuel, and fuel cost money, as you are reimbursed for the overall drive you must deduct the cost of fuel from your overall earnings.
ATO as your partner:
Any time you make an income the ATO want their cut. in a very easy example, if you are on the 30% tax percentage, then you must deduct that from your revenues, and that is a very significant cost to take into account. another cost is the fact that the ATO announce that every UBER driver must register for GST (just like a taxi), which will make your overall profit from UBER slimmer.
As you can see, extra cash can will come for a price, and you should understand the overall price before you put the key in the ignition, because that might not benefit you at all, on the other hand, you might get a significant extra cash, and that will offset your cost and leave you with much-needed profit.