Question
If we estimated that a student who wanted a part-time job could earn enough money to pay his or her car-related expenses and earn roughly
If we estimated that a student who wanted a part-time job could earn enough money to pay his or her car-related expenses and earn roughly $100 per week in extra spending money. The idea of letting a car earn its keep by directly contributing to earnings would probably is appealing to many college students.
Table 1: UberX Fare Schedule
Here are the basics:
Uber would actually be profitable for a typical student. If we assumed a typical student might have a car payment of $300 and car insurance of $250 each month, and the car has an estimated fuel efficiency of 23 miles per gallon in the city and 34 on the highway. The average cost of regular unleaded gasoline to be $2.25 per gallon, and finally, we assumed that the typical college student was in the 15% federal income tax bracket.
Passengers pay the total fare plus the Uber service fee of $1.45. Drivers receive 80% of the total fare and nothing from the service fee. Also, the minimum cost to the passenger is always $5.00.
= $1.00 + ( $0.12) + ( $0.93) + $1.45 = ($1.00 + ( $0.12) + ( $0.93)) 80%
Now, if an ubber driver picked up a passenger in the morning rush hour and drove 3.21 miles from pickup to drop-off. The ride took 11 minutes and 10 seconds. The passenger paid a total of $6.78 and the driver received $4.26 with this information we can summarize
Table 2: UberX Payout Example
If driving full-time, an average from 50-55 hours per week, usually drive about 6 hours daily during the first half of the week and about 10 hours per day on Thursday, Friday, and Saturday. The driver makes also an average of about 950 miles driven each week, also driver can take any day off that want without asking a boss. The driver usually work in the morning and evening rush hours and sometimes the nights and late nights for sporting events, concerts, and the bar crowd, making an average about $650-$725 in net pay each
Table 3: Costs of Driving
- What are the potential cash revenues and cash costs of driving for Uber? Assume you could work up to 20-25 hours per week, and drive an average of 400 miles per week.
- Construct and evaluate a SWOT analysis of driving for a rideshare company. What does your analysis show?
- Based on the information in the case, how much would you need to drive to pay your car payment, insurance, the additional costs, and have an extra $400 per month in spending money? How does this compare with a retail job of $10.50 per hour? Assess your analysis. Assume no gasoline costs for the retail job and 15% withholding for taxes and FICA. Hint: Use a breakeven analysis for each calculation.
- What are the tax considerations of working part-time at a retail company versus being an independent contractor and driving for a rideshare company? Assume a federal income tax rate of 15%.
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