I have been regularly using Uber for a couple of years now. I was curious to understand the economics of Uber drivers. So, I listed some questions which I felt would be interesting to learn about.

Before proceeding, I would like to mention that these are the real details and numbers that I have learned from actual Uber drivers.

I usually travel using the UberGo facility and so the facts and numbers here, are also only with regard to UberGo.

Usually, the most common cars used by Uber drivers (In Bangalore) are Tata Indica, Toyota Etios and Swift Dzire etc. The approximate prices for these cars is in around Rs. 7 lakh.

Now let us assume that the driver has Rs. 2 lakh of his own personal money to spend along with a Rs. 5 lakh loan, for purchasing a car for Uber driving. Then, in order to properly calculate the driver’s bet profit in a total of 5 years, we require taking into consideration, several factors. These are mentioned below:

1. **Revenues:**

a) Revenue earned through base-fare per trip:

Base fare per trip | Rs. 35 |

Total Base fare earned in a day (No. of trips per day is 15) | 15 x 35 = Rs. 525 |

b) Revenue earned due to driving a certain distance: This rate of Rs. 7/ km begins to increment on the base fare, only once around 2 km is traveled.

Number of trips per day | ~ 15 trips |

Average distance per trip | ~ 13 km – 2 km = 11 km |

Approximate distance traveled per day | ~ 15 x 11 ~ 165 km |

Revenue earned per km | Rs. 7 |

Total income earned per day through distance traveled | 165 x 7 ~ Rs. 1150 |

c) Revenue earned through time taken to complete a trip:

Revenue earned per minute | Rs. 1 |

Average time per km | 4 minutes |

Average money earned through time per km | Rs. 4 |

Number of km traveled per day | 200 km |

Total income earned through duration of trip | ~ Rs. 800 |

d) Quite recently, there was also a new introduction of a rule, that for trips longer than 15 km, the rate per km is Rs. 14:

Number of trips per day more than 15 km | ~ 4 trips |

Average distance more than 15 km, per trip | ~ 2 km |

Approximate extra distance traveled per day | ~ 4 x 2 ~ 8 km |

Revenue earned per km | Rs. 14 |

Total income earned per day through distance traveled | 14 x 8 ~ Rs. 110 |

Now, we can add up the revenues earned totally from all four categories in order to obtain the total income earned per day.

This total income earned per day is = Rs. 525 + Rs. 1150 + Rs. 800 + Rs. 110 = 2585 ~ Rs. 2600.

Therefore, he/ she earns:

Total income per month (Assuming he/ she works 25 days a month) | ~Rs. 65,000 |

Total income per year | ~Rs. 7,80,000 |

Total Income in 5 years | ~ Rs. 39,00,000 |

Therefore her/ his total income in 5 years through Uber driving is amounted to roughly **Rs. 39 lakh**.

2. **Costs:**

a) Cost of purchasing car including both repayment amount for loan as well as the separate personal money used for purchasing the car:

Cost of Car | Rs. 7,00,000 |

Amount of loan borrowed | Rs. 5,00,000 |

Interest on loan | 15%, compounded annually |

Time span for repayment | 5 years |

Amount to be repaid | ~ Rs.10,00,000 |

Amount of money personal money spent on purchasing the car | Rs. 2,00,000 |

Total costs spent towards the loan, and car | 2,00,000 + 10,00,000 = Rs. 12,00,000 |

b) The cost of diesel:

Cost of diesel consumed per day | Rs. 650 |

Cost of diesel consumed per month | 16250 ~ Rs. 16,000 |

Cost of diesel consumed per year | 192000 ~ Rs. 190000 |

Cost of diesel consumed in 5 years | ~ Rs. 9,50,000 |

c) The costs spent on paying Road tax:

Total Road Tax per year | 25,000 |

Total Road Tax in 5 years | 1,25,000 |

d) The costs spent on paying car insurance:

Total Insurance costs per year | ~Rs. 15,000 |

Total Road Tax in 5 years | ~Rs. 75,000 |

Now, the total cost incurred in the span of 5 years is: Rs. 12,00,000 + Rs. 9,50,000 + Rs. 1,25,000 + Rs. 75,000 = **Rs. 23.5 lakh **(give or take).

Thus, the net profit earned by an Uber driver in a span of 5 years is approximately Rs. 39,00,000 – Rs. 23,50,000 = Rs. 16,50,000 ~ **Rs. 16 lakh. **Hence, this can be simply restated as earning a net profit of around **Rs. 3.2 lakh** annually.