1. UberPeople.NET - Independent community of rideshare drivers. It's FREE to be a person and enjoy all the benefits of membership. Sign-up HERE!

Featured HOW TO: Calculate your vehicular expenses

Discussion in 'Advice' started by FXService, Sep 9, 2018.

  1. FXService

    FXService

    Location:
    Phoenix
    Driving:
    UberBLACK
    This is for you, newbies. Welcome to UP! I’m glad you have found us, and we have created a treasure trove of information for you! (Mods sorry in advance if this is posted in wrong forum) While you will find amazing strategies to increase your revenue, I’m here to remind you of that minus sign hanging out near your new and improved revenue stream. **** that minus sign when it’s getting too close to your dollars, right? Well, too bad. It isn’t going anywhere. But you can find out just how big of a jerk King Minus is when it comes to your car. Your place of business. I've posted before how to calculate your expenses in this business. However, after going through my previous posts I can't find it. It's a combination of cost per mile (consumables) and cost per day (services, etc). I’ll explain below:



    Consumables:



    Basically, your consumables are things like tires, gas, brake pads, any maintenance really. This is calculated like this. Cost/miles. So, gas would be $2.50/25mpg= $0.10 /mi, oil change, $30. /5000=$0.006 /mi. (I always use 1/10 of a cent because you start adding up tires, brakes, spark plugs, struts, rotations, fluid changes, depreciation, many of these will be closer to .5 to 1 cent/ mile but they do add up over a 100k miles. So even neglecting a $0.01 per mile over a period 100k miles means $1,000.) My tires were $675 when I replaced with 80k mile Michelins, I can realistically expect about 70k. $675/70,000=$0.01 per mile.


    Services:


    Your "services" are things like insurance, registration, car wash, etc. The formula I use for this is Cost per year/365=daily cost. I prefer breaking it down into a daily cost because it's a very convenient unit to work. easy to determine a week (x7), month (x 28 to 31), etc. This is often an overlooked or misunderstood cost, especially for Part-timers. because for you guys, the formula is daily cost x N%. (If anyone needs help with this let me know). Also, a lot of people say insurance, registration, etc aren't legitimate to consider expenses since you must pay them anyway. That's Bull****, especially if you have a commercial or RS policy/endorsement. Do you think the brick and mortar store doesn't consider their cost of insurance a legitimate expense just because it must be there anyway? I'd also like point out that ALL these expenses are the true cost of owning a car in general, it's just as transportation providers we burn through this A LOT quicker than most people and which is we need to be aware of it.


    Depreciation:


    Depreciation is a bit tricky because it's based on age + mileage. And even then, age is usually weighted over mileage. How much age trumps mileage in depreciation really depends on make/model/trim, etc. I could write an entire thread dedicated to depreciation only. However, for the sake of this post we will be using the Edmunds 5-year/ 15k mi/yr cost to own and look at the total depreciation and converting that into a consumable. This keeps it simple. Now, we divide by 75,000 (15k x 5).


    So, take a 2012 Prius:


    We have depreciation over 5 years, $8,446/75,000=0.113/mi. Depreciation is ALWAYS hardest the first year but after that goes on a slow decline. Also concerning depreciation, for you guys driving 5-year-old or older beater for X and XL, you can even not factor in depreciation as the car will have been so depreciated already (to a resale value of 1,500-3,000) that honestly scrapping the vehicle would be as much if not more than you could make in a resale.


    Also, the reason why I posted depreciation separate is because of those guys using vehicle model years 3 years old or newer and trading it in. You will most likely find that when you do go to trade in on a vehicle 3 years old or newer that your depreciation using this formula is understated due to depreciation being more the newer the vehicle. Blue Book guides will corroborate this to a degree. This math isn’t exact as depreciation itself is a fluid value just like gas and can change daily depending on the market.

    Whew, that’s a lot of math! So, what does this mean for you and your rideshare/livery business? It means it’s number crunching time. Now we are going to figure out how to put all these numbers together and find out just how much our business costs over varying lengths of time. Logging this data will greatly help you discover trends, make informed decisions, and give you better control over your business. If you have a basic understanding of Excel, you could even make a spreadsheet to help you track this and let you create year over year, month over month, trends. One of our more successful drivers/fellow forum members in the Phoenix market, JdemontoJdemonto , does this and uses this data to vastly improve his revenue and lower costs. Onto the math. CHARGE!



    2012 Prius*


    Consumables (not 100% inclusive and calculated using 2012 Prius service schedule, link: https://www.driverside.com/service-schedule/complete/toyota-prius-2012-30842-53634-133862 ):

    Depreciation: $0.113

    Gas: $0.058 (using $2.85/gal as national average)

    Oil changes: $0.004 (@ $40/10,000)

    Tire rotation: $0.004

    Alignment: $0.004 (assumed $70 for wheel alignment. Usually FWD cars in this business need them about every 15-25k, I estimated 20k)

    Air Filters: $0.001 (combined cost of $25 for both engine and cabin at 20k miles. Please don’t tell me you’re paying someone to do this for you. If you own a screwdriver you can replace an air filter on ANY CAR)

    Tires: $0.008 (MICHELIN DEFENDER T + H195 /65 R15 at $523 from Discount Tire and assuming 70k useful tread out of 80k manufacturer, these are also damn good tires and you can usually catch them on sale at Costco)
    Spark plugs: $0.001 ($131/120k mi)

    Coolant flush: $0.004 (at $188.50 every 50k)

    Total: $0.197/mile



    Services:

    Insurance: $10 ($3650/yr for math simplicity)
    Registration: $1 ($365/yr)

    Car Wash Pass: $0.99 ($30month x 12/365)

    Market specific fees, licenses, etc: $x.xx

    Total: $11.99/day



    Ok, now let’s start putting this together and working with it. First, we are going to determine how much your expenses are just for today.


    So it’s the beginning of your day, you’re just waking up, getting coffee, etc, checking your trips from last night, nope still no tips but they did leave a 5 star and thank you for the 3 waters they drank, checking out the surge maps, and oh you haven’t even turned on your car yet, but it doesn’t matter, you have still spent $11.99 today running your rideshare business. So, you sit on the couch, reading UP, and you get your first ping! WOO HOO! You drive, 3 miles 10 minutes’ drive to pick them up, take them 20 miles/25 minutes to the airport and you get a rematch, another ¾ miles and 5 minutes unpaid circling the airport and you pick up pax, and take them 15 miles in about 20 minutes. Now at this moment you have driven 38.75 miles over an hour. Well, your consumable expenses are $7.63. So, $11.99 + $7.63=$19.62. Now we’re going to assume you get $0.75/mi, $0.075, and $0.90 base fare. So, gross revenue is:


    35 x $0.75 + 45 x $0.075 + 2 x $0.90 = $31.43


    Now calculate net revenue:


    $31.43 - $19.62 = $11.62



    Now to get a realistic picture of your earnings add up all your miles driven that day and multiply by your figure from adding your consumables. Then subtract that and your services daily cost from your earnings for that day. This will be your net or take home.


    Now, we’re going to calculate a week (most of you should have this figured out by now, but just in case you don’t, here it is.)

    Net Revenue by day

    MONDAY: $178.63

    TUESDAY: -$11.99 (Look at who’s being lazy and taking a day off and sitting on their couch all day)

    WEDNESDAY: $164.79

    THURSDAY: $162.48

    FRIDAY: $298.36

    SATURDAY: $301.23

    SUNDAY: $145.07

    Total: $1238.57**



    **These figures are not meant to be used as a factual example of real world earnings. Just merely a simulation to explain the math.


    Your net will vary depending on number of loaded miles versus unloaded miles. I hope this helps. Just because you don’t physically swipe your card or pay cash does not men you are not spending money. The purpose of this post was to help you understand your expenses which go far behind just gas and coffee. I know this post is long, but I really hope some of you new guys use it to make the most of your business and wish you all the best of luck.

    ~FXService


    *I’ve never owned a Prius, this is purely hypothetical for educational purposes. I attempted to get as realistic as possible, but please do your own research when calculating these figures for yourself


    **These figures are not meant to be used as a factual example of real world earnings. Just merely a simulation to explain the math.

    Optional number cruncher soundtrack:

     
    Last edited: Sep 9, 2018
  2. Oscar Levant

    Oscar Levant

    Driving:
    UberX

    Why bother? The standard deduction is actually more generous than itemizing, and a lot less work. (Valid only in the USA ).
     
  3. FXService

    FXService

    Location:
    Phoenix
    Driving:
    UberBLACK
    This has nothing to do with taxes whatsoever. Even if you don't pay taxes on this income, there is still expenses...
     
  4. SibeRescueBrian

    SibeRescueBrian Moderator

    Location:
    Hillsborough, NJ
    Driving:
    UberX
  5. Oscar Levant

    Oscar Levant

    Driving:
    UberX
    Isn't it true that things like depreciation, gas, are not necessary to account for if you take the standard deduction?

    I get it, you just want to know all that stuff. That's fine, I'm way too lazy.
     
  6. FXService

    FXService

    Location:
    Phoenix
    Driving:
    UberBLACK
    How many times have you taken Uber or Lyft as a passenger? I've done it many times. The majority of my drivers show up in newer model cars. Hell I was telling SibeRescueBrianSibeRescueBrian that I got picked up in brand new Jaguar XF one time on X. One lyft driver I casually talked to had just bought a brand new 2017 Camry SE strictly for rideshare. he had for "about 3 months." odometer read 35k and some change. another guy had a 2016 RAV4 for a year, he also bought new for this gig. 75k mile. dash lit up like a christmas tree with CEL and other systems warning. and transmission shifted roughly. Most cars are lucky to last to past 250k miles. if you have people putting 80k a year on brand new vehicles and with banks becoming ever stricter and raising interest rates on financing people who have rideshare as their only source of income. The standard deduction goes out the window when it's time for a new car and you can't buy it outright. A subprime interest rate on a 18k loan or higher will easily out pace 3 years of the standard deduction. Sure people should only be driving beaters for X, XL, and even Select to be honest, but the reality is, they don't. And if I can help just one person sit down and figure out if this is for them or not and save them from massive debt down the road I'm ok, and I feel it's worth the effort. And if my super itemized expense how to can help some dude in a beater or looking for a beater maximize his earnings by realizing his expenses and minimizing, then again, it is worth it.

    Also, I didn't even factor in food. that post is 100% just about the vehicle. Your dry cleaning for your suits, your lunch, etc, that's additional.
     
  7. Great list even if you dont drive for Uber. Basically expenses of owning a car. It's more expensive than just the price.

    Great to have a gig to offset those expenses...otherwise it a just owning a car.

    If you work from home by this logic you should depreciate your home, add all appliances bought, heating cooling etc.. . Who can afford to work from home.
     
  8. Merc7186

    Merc7186

    Location:
    Buffalo NY
    Driving:
    UberXL
    Smart drivers dont buy brand new vehicles for doing ride share. Buy a used, cheap vehicle that runs decently, interior clean and exterior decent and away you go.

    Explaining depreciation to most people is pointless. I am a Fixed Asset Analyst for my company and have had guys argue depreciation on my 2007 Town and Country that I paid $4600 for...and tell me that it is still depreciating.

    Simple math....$5 an hour of driving should be dedicated for gas, maintenance and depreciation (or replacement car fund)
     
  9. FXService

    FXService

    Location:
    Phoenix
    Driving:
    UberBLACK
    I also pointed out that people with older vehicles shouldn't worry about depreciation. to be fair even my 2012 Prius is a bad example of depreciation.

    assuming 300k miles depreciating at $0.113 a mile that comes out $33,900. Was a base model Prius even that much new in 2012? lol

    Also, as I said in a reply to another member. There aren't a lot of smart drivers out there. How many newer cars do you see with U/L stickers?
     
    Last edited: Sep 9, 2018
  10. oldfart

    oldfart

    Location:
    Fort Myers
    Driving:
    UberXL
    Good job but I take issue with your method of calculating depreciation. For a full time rideshare driver 15000 miles a year is not a realistic number 75000 miles is more like it. and I would further argue that when you put that many miles on a car , mileage is more important than years

    But my bigger point is that depreciation dosent matter. I know depreciation is a cost but what’s more important is not keeping track of how much value of your current car loses each year but rarher what you need to prepare for your next car.

    So it’s one thing to calculate that your depreciation is 11 cents a mile what’s more important that you are prepared to buy a new car when the old one is finally junk or befoe, if that’s what you want

    For example I paid $25000 for a 5 year old Ford Explorer I put it into rideshare 2 years later when it had 70000 miles on it. I estimated the value at that time to be $20000. I’m driving at the rate of 6000 miles a month and plan (hope) to replace the car after 3 years when it will have about 300000 miles on it and it’s value near zero. So $20000 over 200000 rideshare miles is 10 cents a mile

    Now that’s an important number to know but more important is a plan for a new car. My plan is to buy a big expensive luxury suv $40000
    So after 200000 miles on my Ford I should have $40000 set aside for the new car. Which is 20 cents a mile

    Now if I planned to buy another used Ford Explorer my number would be 10 cents a mile. Or a used $10000 used Prius 5 cents

    So the depreciation number is nice to know but not important especially if you use the 54.5 cent standard mileage deduction. Whats important at least to me is the “replacement number”

    And what’s most important to me is that I have that money when the time comes. In other words have reserve account and add to it every month
     
    Last edited: Sep 9, 2018
  11. reg barclay

    reg barclay Moderator

    Location:
    rockland/westchester NY, new jersey
    Driving:
    UberX
    Deducting the amount you spent at the gas station from gross income, and remaining in blissful ignorance of maintenance, repairs and depreciation, sounds a lot easier.
     
  12. oldfart

    oldfart

    Location:
    Fort Myers
    Driving:
    UberXL
    As long as you have a back up plan. just in case

    I had a passenger the other day that told me about the accident a past Uber driver she had, had with her in the car. He needed a tow truck but didn’t have the money or credit to pay for one. She said she paid

    Im guessing he won’t have the money go repair the car or buy a new one or if he’s insured to pay the deductible. And even if the other guys insurance pays, he’s going to be out of business for a while

    Stories like this are why it’s important to have some savings or good credit.
     
  13. reg barclay

    reg barclay Moderator

    Location:
    rockland/westchester NY, new jersey
    Driving:
    UberX
    I agree, I was being sarcastic. Personally, I put away a chunk of my gross Uber/Lyft income every week, for future maintenance/repairs and towards the next vehicle. Until recently I was designating a certain amount for this stuff, but keeping it in the same account. I realized that having it in the same account takes more discipline not to spend it, so I started putting it in a separate account.
     
    DocT, Cableguynoe and SibeRescueBrian like this.
  14. oldfart

    oldfart

    Location:
    Fort Myers
    Driving:
    UberXL
    The dicipline is the thing. I did well in the winter but not so well in the summer. Im fortunate however, I was able to start this Uber thing with a pretty good car and enough money in the bank to buy a new (used) car. It’s hard to be disciplined and at least for me, harder to to be disciplined when you don’t have to be
     
    reg barclay likes this.
  15. I really appreciate your efforts to help other drivers. I'm not a noob but I did learn from your post and will incorporate that information to my routine. Thanks
     
  16. I’ll start by saying that I didn’t read your entire post. So I apologize if you touched on this, but I don’t think you did.

    I assume most drivers don’t use their car only for UBER. They have lives, kids, jobs, etc.
    Most drivers already had their car prior to being drivers.
    So that car is already depreciating every day and would be even if we weren’t ubering.
    Same with needing new tires, etc etc.
    We would need to do that anyway.

    Sure, now it’s depreciation faster and we need those new tires sooner. But we would have gotten them anyway.

    What’s the formula for that?
     
  17. Christinebitg

    Christinebitg

    Location:
    Houston
    Driving:
    UberX
    I take issue with the statement that anything over five years old doesn't have significant depreciation.

    I bought my car a year ago, and It's a 2010. I paid $18,000 for it. The depreciation is slower than when it was new. But it's not neglible.

    Christine
     
    macinmn and SibeRescueBrian like this.
  18. Bbonez

    Bbonez

    Location:
    USA
    Are you serious? First a side gig is not off setting those expenses, it is creating them. The rideshare endorsement and rapid depreciation due to milage are not part of "just owing a car".

    Your home analogy is so terrible I dont know where to start. My grandmother bought her home for under 20k 50 years ago now its worth about 1M she sells Avon out of a home office. By your logic she should add 20k a year to her income. Luckily for her the IRS is not that mentally disabled.

    I normally find your uber propaganda funny, but this was low and attempting to take advantage of your lower IQ drivers and prospective drivers.
     
    melusine3 likes this.
  19. FXService

    FXService

    Location:
    Phoenix
    Driving:
    UberBLACK
    I touched on this. This is where a detailed mileage log is important. Basically you log your Uber miles App on to app off. Say you drive 800 miles one week and your vehicle costs $0.20 /mi and $10 /day. 500 were spent hovering, the rest spent grocery shopping, kid ferrying, going to work, etc. So 800 x $0.20 = $160. To find out what part is the Rideshare expense turn the mileage into a percentage. So we 500/800=0.625. Now we take that (N%) and multiply it by the per mile (M) cost and the per day (D) cost and add it together.

    So the formula for a week is:

    M x N% + 7D x N% = rideshare expense

    160 x .625 + (7)10 x .625 = $143.75



    If you have a rideshare insurance policy you don't use a percentage. Use the full price converted to a daily because it is 100% a business expense. Same thing for any services or fees strictly for rideshare. Even if you only rideshare 10% of the time, 100% of those costs are for rideshare. If I left anything out feel free to ask. I literally just woke up.

    This is true. But as I pointed out in my post depreciation is a combination of age + mileage with age being the heavier weighted variable.

    So one year ago you bought a 2010 car for 18,000. Just off the top of my head I'm going to assume you have a three row SUV/crossover made by an American company or Toyota. Or you have a luxury sedan most likely made by a European manufacturer. I could be wrong. Again, I just woke up and this is off the top of my head.

    So at this point, in 2017 you bought a 2010 vehicle. 7 years old now 8. Probably had 90k to 120k miles. Your depreciation is significantly more dependent on the age of the vehicle barring any nasty grams on the Carfax. Here's why: Realistically there has been a redesign or refresh on the model lowering the value of yours regardless of miles, in theory it's already reached the point of it's first major service (think 90-120k mile service) which is usually the make or break point of most vehicles.

    Also the make and model of your vehicle are going to affect this. Assume my guesses are correct and you bought the 3rd row SUV. Whether that vehicle has 150k miles or 200k the trade in and resale value is not that much different assuming good condition, maybe $1,000. Buyers and dealers know these vehicles operate well into or past the 300k mileage. However, on an E class or 5 series not so much. The difference in resale value of 150k miles and 200k is huge. So you need to research your vehicle and determine the best way for you to calculate your depreciation. But for most people with something like a mid size economy sedan or smaller, after 5 years it's negligible. It's not like the 2013 Camry is going to be making a comeback.

    Like I also said. I could do an entire thread on depreciation.

    Again sorry if I left anything out. I'm still waking up.

    Uber on.
     
    Last edited: Sep 10, 2018
    SibeRescueBrian likes this.
  20. The pax paid for the tow?! Ew.

    That was kind of her. But how humiliating and unprofessional of that driver. Even if I was a horrible driver with terrible finances, I’d never let a pax know. (I’d never be in that situation, however.)
     
    Fozzie likes this.

Share This Page