The gig economy is real. It’s not just two guys with an air mattress anymore. People around the world are choosing to ditch their 9-to-5 jobs in pursuit of flexible, lucrative workplaces without the restrictions of the office. Mastercard expects the gig economy to be worth $455 billion by 2023. But is it all smoke and mirrors? If you’re thinking about delivering food for DoorDash, how much of that $455 billion can you expect to take home? Let’s find out if driving for DoorDash is worth it.
What is DoorDash?
DoorDash is a food delivery service that allows customers to order from restaurants through an app. It’s the largest food delivery service in the United States, so hungry folks are more likely to use it, since it offers the widest variety of dining options.
DoorDash does not hire delivery drivers, instead using independent contractors to schlep food around town. Drivers are called Dashers, and they find deliveries through the Dasher app. In theory, this system allows Dashers to work when they want, where they want, and earn as much or as little money as they want to make that day. But is that realistic?
The economics of DoorDash
In our search for an answer to the question “is working for DoorDash worth it?” let’s start by looking at the money, which is usually the factor that matters most.
How much do Dashers make?
Dashers are not paid an hourly wage. Instead they are compensated using an algorithm that factors in:
- Time
- Distance
- Location
- Promotions
- Tips
We’re not going to try to explain the pay model in detail here for two reasons: (1) it’s so complicated that even DoorDash doesn’t explain it fully on their website, and (2) it changes according to the needs of DoorDash, regardless of how that affects drivers. Basically, if you work in an area with a high base rate (San Francisco, Houston, Dallas-Fort Worth, Phoenix, Washington DC, Atlanta, Los Angeles, Chicago, New York City, Boston, Miami), constantly seek out promotions, and only get good tips, you can earn at the top of your potential on DoorDash. Otherwise, you’re going to be average or below.
The DoorDash website claims that Dashers make $25 per hour in the United States. If you take a second to verify that elsewhere, you’ll find that Glassdoor puts it somewhere closer to $20 per hour, with a maximum wage topping out at $30 per hour, whereas Indeed sets the average around $16 per hour. The truth is that there is no guaranteed hourly wage while driving for DoorDash so the pay can be extremely variable—you could conceivably go out to work and make $0 for your effort.
What about expenses?
Great question: Dashers have to pay for taxes, fuel, parking, tolls, car repairs, and maintenance out of their DoorDash wages. So even if you’re earning at the high end of the scale, say around $30 per hour, that rate could come down significantly after deducting all of your costs. And if you’re in a city with a lower base rate and you have a slow shift, it could end up costing you to drive for DoorDash.
DoorDash recently announced a fuel subsidy in the U.S. to try to combat high gas prices but it only offers drivers 10% cash back on fuel purchases or $5 per week. That’s not enough to negate the rapidly increasing cost of fuel.
So before you start Dashing, you need to ask yourself two critical questions:
- Is DoorDash worth it after taxes?
- Is DoorDash worth it with gas prices constantly going up?
In some cities, at some times of the day, if you have a highly fuel efficient vehicle, and you write off your mileage, the answer is MAYBE. But it’s far from a sure thing. And it’s certainly not predictable income even at the best of times.
DoorDash pitfalls
The DoorDash system makes the process seem simple: open the app, accept a delivery, pick it up from the restaurant, deliver it to the customer, lather, rinse, repeat. But there are plenty of things that can happen along the way that can affect your pay. For example:
- The restaurant delays or loses the order while you wait outside
- The delivery address is very far away
- The delivery address is hard to find or incorrect
- The customer takes a long time to collect their order
- The tip is low or nonexistent (all too common)
- TRAFFIC!!!
Every one of these is going to happen to a Dasher at some point and they can cost a little or a lot—they can even affect your rating as a driver:
Without getting too fatalistic about it, the amount you make driving for DoorDash is often not even up to you, it’s luck!
What about Dashing by bike or scooter?
In some cities, you have the option of making deliveries on your bike or scooter. This approach definitely cuts back on fuel costs, maintenance, and vehicle depreciation since you aren’t driving a big steel gas guzzler. So there is potential to earn more money.
But there are drawbacks, the biggest of which is location. If you’re on a bike or scooter, you’re pretty much tied to the area where you live, and there are a limited number of urban centers where bike delivery is an option. If there aren’t deliveries available in that area, or if it’s an area with a low base rate, you probably aren’t going to ride 30 miles to get a better gig. You also can’t complete long distance deliveries (especially of hot or frozen foods). So your options are limited, which further restricts your earning potential.
And let’s get real, the fuel cost is still there—instead of gas going into your tank, it’s food going into your belly.
So just like delivering in a car, Dashing by bike or scooter might be a great option, but it also might be a waste of your time and money.
Start something more reliable
Are you thinking about listening to the little entrepreneurial voice in your head? DoorDash could be an option if you tick all the right boxes. But why not start something that is yours, that you control, with profits that aren’t artificially limited by a multi-billion dollar corporation?
Launching a small service business can be an incredible way to build something from the ground up, escape a stodgy office environment (or ditch the endless job search), and enjoy the flexibility promised by the gig economy—on your own terms. What type of business? Well that’s entirely up to you, but we’ve got IDEAS.
Home improvement and maintenance
If you’ve got handyperson skills, someone out there is ready to pay for your help. Even simple tasks like mowing lawns, power washing, and painting can add up to big profits if you’re motivated. Get creative with the tools you have and the demand in your area and you could be in business.
Trash hauling
If you were thinking about Dashing in your truck, why not fill it with garbage instead of food? With folks increasingly living in smaller homes and condos, they just don’t have the space to hold onto unused items and they need someone to show up and take them away. This is an incredibly cheap and easy business to launch if you already have a capable vehicle.
Cleaning
You know how to clean. The equipment and supplies are cheap. And homeowners and office managers are always desperate to find a reliable cleaner who knows how to keep their spaces sparkling. Office cleaning is a no-brainer for night owls, while home cleaning is perfect for early birds.
Don’t see the career for you? Strap in, we’ve got you covered. Check out our list of recession-proof business ideas and our collection of weird business ideas that you can start right now. And when you’re ready to start your business, Durable has everything you need to make it happen.
