We built the Lyft platform to be a marketplace where drivers from all backgrounds can connect with riders and make good money on their own time. The flexibility of choosing where, when, and how to drive is one of the best parts of using Lyft.
On February 6, 2024, Lyft committed to drivers that after external fees (like commercial insurance) are subtracted, their share of rider payments will be 70% or more each week — guaranteed. But we know that we can’t look at a good share of earnings alone. We need to look at the actual amount drivers make. So we wanted to provide a bit more information about how we understand drivers’ earnings and expenses here.
We sometimes communicate drivers’ gross earnings. That's because drivers are responsible for and solely in control of their individual expenses. In the 2nd half of 2023, the median U.S. driver using their personal vehicle(n.1) earned $30.68 (including tips and bonuses)(n.2) gross per hour of engaged time — when they were on the way to pick up a passenger, or had a passenger in the car.(n.3) And that figure has grown more than 18% since the 2nd half of 2019.(n.4)
[See below for footnotes]
From a driver’s point of view, however, we recognize this isn’t the whole story. Rideshare driving also generates expenses, from the cost of gas to the cost of additional maintenance and cleaning. Drivers’ experiences with the platform vary, based on their car or driving choices like the time of day and location, but they consistently tell us that earnings are their number one priority.
Long-term, we are focused on helping drivers understand whether using rideshare makes sense for them. So we dug deeper into driver expenses to make sure we are seeing the full picture of drivers' earnings.
Driver expenses
All driving expenses, for rideshare or personal use, fall into two categories: fixed costs and marginal costs. Fixed costs are the upfront costs associated with owning a car, like the cost of the vehicle itself (e.g., car payments), vehicle registration, and personal car insurance (required by law in the U.S.).(n.5) Marginal costs are the costs of driving each mile on the road, including fuel and repairs and depreciation.
To estimate costs for a typical driver on the Lyft platform, we focus on the marginal costs a driver takes on while driving on the Lyft platform — the incremental costs of providing rideshare services. This is because unlike, say, a lawn care contractor who might buy a specialized vehicle to run their business, Lyft drivers typically use something they already own — their car — and put it to work.
Driving on the Lyft platform allows drivers to monetize two assets: their effort and their car. Most drive on Lyft to supplement their income from another job, bridge between full-time jobs, or generate income between other responsibilities such as providing child- or eldercare. For this reason, 94% of drivers drive fewer than 20 hours per week. And the median U.S. driver drove 1,647 engaged miles and spent only 75 engaged hours on the platform in 2023, about 3.75% of the average full-time work year. This data reflects that for most drivers, driving on Lyft is a short-term or supplemental way to use both their time and automobile.
The four main marginal cost categories for rideshare drivers are:(n.6)
Fuel
Maintenance and repair
Mileage depreciation — the declining value of a vehicle based on how much it is used
Extra cleaning associated with providing rides
To estimate these expenses, we used data on car ownership from AAA, and weighted them to the types of vehicles on the Lyft platform (see “Methodology” below). We estimate that the average expenses for U.S. drivers while on the Lyft platform are approximately 31 cents per mile:
Drivers earn by the ride, but we wanted to look at those costs on an hourly basis to make the comparison easier for drivers who think about their earnings that way. So we multiplied that marginal cost by each drivers' average speed, and took the median of those figures to find a median marginal cost per hour of $7.02:
As mentioned above, in the 2nd half of 2023, the median U.S. driver’s gross earnings were $30.68 (including tips and bonuses) per hour of engaged time. Subtracting the marginal expenses per hour from gross earnings per hour leaves the median U.S. driver earning $23.46 per engaged hour after expenses, including tips and bonuses.
While this is illustrative of what a driver might expect to make after marginal expenses, we encourage drivers to do the math on their own expenses and earnings to make the right driving decisions for them. The AAA data is based on new vehicles and average American driving habits. A driver’s fuel cost might be higher or lower depending on where they live or how they drive. And their repair costs might be higher (and marginal depreciation lower) if they are driving a used vehicle with many more miles on it.
Methodology
We’ve used the publicly available 2023 AAA “Your Driving Costs” brochure to estimate what reasonable marginal cost estimates could be for U.S. drivers in Q3 2023. First, we’ve categorized the vehicles on the Lyft platform into the most common vehicle types in this brochure.
Fuel cost and maintenance are taken directly from the brochure. While AAA considers depreciation a fixed cost of ownership that decreases the value of a car over time — regardless of mileage — we know that drivers are putting additional miles on their personal vehicles when they drive on the Lyft platform. So, we considered it a marginal cost, and included it in our expense calculations here. To calculate that marginal depreciation, we looked at the difference in AAA’s estimated depreciation cost between 20,000 annual miles and 10,000 annual miles, and divided that number by 10,000 to find the marginal cost per mile in depreciation.
Finally, while not in the AAA brochure, we know that many drivers choose to purchase cleaning products and services to keep their vehicles looking and feeling good. Drivers spend varying amounts on these products and services, but we estimate that $0.02/mile is realistic — about the cost of a bottle of Febreze after 16 hours of engaged time, or a $25 car wash after 55 hours of engaged time.
Taken together, the weighted average of these expense categories for vehicles on the Lyft platform breaks down as follows:(n.7)
Different Drivers, Needs, and Experiences
The median net earnings of $23.46 is only a midpoint — any individual driver might be earning something very different and might have very different expenses. Drivers decide what car they drive, which days and hours they drive, where they drive, and which rides to accept. All of these choices influence their overall earnings and expenses. Nationally, the bottom 20th percentile driver averaged $17.46 per hour, after expenses, while the top 80th percentile driver averaged $33.09.(n.8)
Median hourly earnings vary by geography. Estimated median net driver earnings are on the lower end of the national range in some lower cost-of-living cities like Memphis (median of $19.07) and Charlotte ($18.72), and higher in some higher cost-of-living cities like Philadelphia ($25.31) and Chicago ($26.90), but that is not an absolute relationship.(n.9)
At the end of the day, a lot goes into how much a driver earns. Many factors — like the costs to maintain different cars, or the decision to drive at different times of the day — are within the driver’s control. That's why we're so committed to continually introducing app improvements that expand driver choice and maximize their time on the road. For example, our industry-leading stay within area filter (see image) lets drivers decide exactly where — on the map — they want their pickups and dropoffs to be. We've heard drivers use this filter to stay close to home or their child’s school, dodge traffic, or even strategize about how to take advantage of bonuses.
There are also factors within Lyft’s control, like the share of rider payments that we take to build a high-quality matching platform, provide comprehensive customer support, and continue to develop safety features. These investments influence the driver and rider experience, leading to a healthier marketplace with higher demand and more earnings opportunities. We’re also doing our part to make sure that these factors are more predictable for drivers, such as our commitment that drivers’ gross earnings will always be at least 70% of passenger payments after external fees each week.
And much is outside both drivers’ and Lyft’s control. Market forces and inflation contribute to the cost of fuel and car ownership, and external fees like insurance and regulator fees continue to increase. Wherever we can, we’re advocating to lower these costs as well, and help where we can — like our cash back program for drivers to get up to 10% cash back on fuel purchased with a Lyft Direct Card.
Beyond our work to make earning on the platform an even more transparent and valuable opportunity, we are also advocating for public policies that protect driver independence so they can continue to work when and where they want to while providing drivers with more benefits and protections. Drivers consistently tell us that this is the model that they want, with more than 90% of drivers supporting this type of policy proposal. We were proud to work with organized labor and bipartisan legislators to support first-in-the-nation legislation in Washington, where drivers’ independence and flexibility is protected, alongside a minimum earnings floor and a range of additional benefits. All this work leads to a better bottom line for drivers.
On all these fronts, and more, Lyft is focused on improving drivers’ earning experience and their understanding of expenses. We work hard to make sure they can continue to drive when and where they want and can earn good money using the Lyft platform, even after their expenses. Our 70% earnings commitment (after external fees) guarantees that each week drivers get good value for what we provide. In all, we obsess over drivers so that they can succeed in using Lyft.
Footnotes referenced above:1 This earnings figure represents the median gross earnings for drivers across the U.S. in the 2nd half of 2023, excluding Express Drive or any other third party renters not using their own vehicle. Median gross hourly earnings in cities that fall below the national median range from $17.78 to $30.67 (e.g., Orlando ($22.06), Miami ($22.35), Houston ($23.75), Dallas-Fort Worth ($26.17), Newark ($26.94), Atlanta ($27.21). As explained further below, median hourly earnings can vary based on geography, among other factors. See “Different Drivers, Needs, and Experiences” below for more information about how some of the difference in driver earnings is driven by geography.
2 We’ve made it easy for riders to tip their driver, and 100% of tips always go directly to the driver, so that $30.68 figure includes a median tip of $2.41. In H2 of 2023, the median U.S. driver using their personal vehicle earned $28.07 (including bonuses) per hour of engaged time without tips.
3 Why doesn’t “engaged time” include the time that drivers are on the Lyft app prior to accepting a ride? Because drivers have no obligation to accept any rides, and prior to accepting a ride request, drivers could be doing anything, including earning through another app. In fact, 66% of U.S. drivers on Lyft say they also work with other app-based platforms. It wouldn’t make sense for a driver's earnings on the Lyft platform to include time the driver is giving a ride on a competitor's platform or engaged in other activities. They may not even be driving at all. The flexibility to work or compare opportunities across platforms, and to accept or reject opportunities offered to them, are just some of the benefits of the Lyft platform.
4 Again, this data excludes Express Drive or any other third party renters not using their own vehicle, and, in some cities median gross hourly earnings fall below the national median, so this data is not indicative of the experience of every driver.
5Beyond insurance required to drive their personal vehicle, drivers do not need to purchase any additional insurance to drive on the Lyft platform. As required by most state law, Lyft carries a range of insurance products for covered accidents in nearly all regions. This includes: third party liability of at least $1,000,000 when a driver is en route to picking up a passenger or when a passenger is in the vehicle and first party coverage which may include uninsured motorist coverage, underinsured motorist coverage, PIP, MedPay, and/or Occupational Accident coverage.
6 The earnings and expense analysis does not include Express Drive or any other third party rentals which have completely different costs and benefits. For example, when drivers rent cars to drive on the platform, whether through our program or not, they have associated rental fees, but not depreciation costs.
7 Note that this estimate of electric vehicles on the Lyft platform is limited to U.S. drivers using a personal vehicle, and therefore differs slightly from other public reports.
8For additional granularity, 25th percentile earnings are $18.62 and 75th percentile earnings are $30.12.
9 The above figures are no guarantee of future performance and not indicative of what any specific driver should expect to earn.
