Join Garrick Chow for an in-depth discussion in this video Understanding your time commitment and financial prospects, part of Starting Your Career in the On-Demand Economy.
- [Voiceover] As you're deciding whether to get into providing on-demand services, and which companies to get involved with, it's important to have realistic expectations of the balance of your time commitment, and your financial prospects. The first question that probably comes to mind is, "Can I actually make money doing this?" The answer is yes, almost certainly, but of course, how much money you generate depends on several factors. The first, being, of course, figuring out how much time you're willing to commit. As with any job, there's no free money being thrown at you. If you want to earn, you have to put in the hours.
If you're driving for Uber or Lyft, that means getting in your car and turning on the app to make yourself available for pick-ups. If you're renting your apartment or home through Airbnb, that means maintaining your listing in terms of making your property look attractive, both physically and in terms of setting your prices. You'll also need to be available to your guests during their stays, and to clean and maintain your property before and afterwards. So, have no doubt that working in the on-demand economy is, in fact, work. You do get the benefit of choosing how often you work, but like just about any other self-employed work, that directly correlates with how much you'll earn.
The next question you'll probably have is, "How much do the companies you work through pay?" Now, since we're speaking broadly about on-demand businesses in general, I can't provide any numbers, but generally speaking, the model most of these sorts of businesses follow is to only take a percentage of what you earn when you're actually working. Signing up with an on-demand company is almost always free, with no monthly dues or anything like that. They get paid when you get paid. But you'll definitely want to check the company's website to see what percentage they take. For example, Uber takes approximately 20% of each fare. Airbnb currently charges a 3% host fee anytime you complete a booking through them.
So the question really isn't so much, "How much do the companies pay?" but, "How large a percentage do they take?" And, of course, closely related to that is, "How much do you charge for your services?" Some companies have set prices that you have no control over. For example, here's what Uber charges for each ride. There's a base fare charged at the beginning of the ride, a cost per minute fee, a cost per mile fee, and a safe ride fee, which is a $1 flat fee that goes to pay for Uber's costs related to background checks, insurance, and other safety features and isn't included in the driver's payment.
The actual amounts for each of these items can vary from city to city. But at the end of the ride, the total is tallied up, and as the driver, you earn 80% of the total. So if the fare is $21, your earnings would be $16 after deducting the $1 safe rides fee. Now, other companies allow you to set your own prices. For example, Airbnb takes 3% of whatever you charge to rent your property. Here's an example from their website. So if you decided to charge $100 plus a $50 cleaning fee for your property, for four nights, that would come to $450.
3% of that is $13.50, but Airbnb does round to whole dollar amounts so they would take a $14 fee, leaving you with $436. Depending on your location, there may also be local taxes involved, so you might end up earning a little less. So, setting your own prices, while offering you more freedom than working with set prices, does come with its own issues. You not only have to come up with what you think is a reasonable amount to charge for your rental, but you'll also need to keep an eye on what other people in your area are charging for similar properties and adjust your prices accordingly to make sure you can continue renting out your place at a competitive price.
You'll also need to take into consideration the cost of operation. As in almost all cases, you'll be responsible for paying the costs associated with working through your on-demand company. If you're driving, you'll need to pay for your fuel, your car maintenance, and cleaning. If you're renting a property, you'll be responsible for cleaning, household goods and supplies, as well as potentially higher utility bills. So these are just some of the things you'll need to keep in mind when figuring out if you'll be able to make money working on-demand. Again, the answer is most likely a yes, but the primary variable is going to be time. Whether you're working through a company with set prices or one that allows you to set your own, the more time you can put in, the more income you'll be able to generate.
If you're only looking to make some extra cash on the side, you can mostly likely get away with a few hours a week here and there. But, if you want to earn enough to generate a primary income, you'll most likely have to put in the same kind of hours as you would with any traditional job. Also bear in mind, that some companies do require you to put in a minimum amount of time or work to maintain your status as an active worker. But they're usually pretty generous minimums. Uber for example requires you to complete just one drive per month to remain an active driver. But do be sure to check with the company you're working through to see if they have minimum requirements.
Garrick Chow explains the basic structures of the on-demand economy and the skills and characteristics of successful on-demanders, so you can determine if on-demand work is the right fit for you. Then learn about the time commitment and expectations around pay, what the employer provides, and what one can expect from clients. Garrick then discusses tools to keep you organized, including how to best track income and expenses.
Finally, the course offers tips and tricks and a case study based on the author's firsthand experience as an Uber driver.
- Preparing to work on demand
- Managing expectations from on-demand clients
- Tracking expenses and mileage
- Optimizing your income
- Getting support online
- Case study: Becoming an Uber driver
Skill Level Beginner
Q: This course was updated on 05/26/2017. What changed?
A: A new video was added that explains how to optimize your LinkedIn profile for on-demand work.