Is Uber Saving or Costing You Money?

By Andrea Cannon on 20 July 2016 2 comments

Uber is more than just convenient; it can actually save you time and money. Everyday commuters are saving hundreds of dollars per month by foregoing their car in favor of rideshare apps like Uber. Businesses are also saving money by using Uber for their business transportation needs, rather than hiring a limo or expensive business vehicle for their employees.

Uber can also be safer than a taxi because it's all managed through the app, so you can always track your driver and leave reviews for them later on. When it comes to largely populated cities like Manhattan, simply ordering an Uber through the app (rather than fighting with people to catch a cab) can be very convenient and save you a lot of time and frustration. You can even automatically pay using the app, so there's no need to carry cash or worry about paying at the end of the ride.

But if you're using Uber often enough, is it actually saving you money? Or is it draining your bank account? Let's investigate.

What Does Uber Cost?

The cost of Uber depends on which car you choose, the time of day, and how far you will be going. For instance, if you choose a traditional UberX vehicle, you will be charged per mile and per minute with a small booking fee of $1.65. If you choose an SUV, the charges per mile will be higher, as well as a base fare of $15, which will cost you a lot more for both short and long rides. A luxury vehicle is even more expensive and the base fare is $20.

For an accurate fare quote, you can either use the app or a site like UberEstimate.com. You simply put in your pickup and drop-off locations and it will give you an accurate price range. You aren't required to tip, and Uber does not offer the capabilities to tip on the app, but your driver will usually accept a cash tip, if you feel like it.

Watch Out for Surge Pricing

Surge pricing occurs when the demand for Uber is higher, such as on the weekends, around holidays, and in inclement weather. The cost of your commute will be higher thanks to surge pricing, which can go up to eight times the normal rate. In these cases, you likely won't save any money using Uber and should instead choose a rental car, public transportation, or even a taxi.

Try UberPool

If you want to save even more money, consider using UberPool. With UberPool, you share a ride with another person who is going on a similar route as you. Then, you split the cost of the trip to save more money. While this will save you more in the end, it won't split the cost in half, so if you don't feel comfortable riding with another passenger, don't bother, as you won't be saving that much.

The Costs of Car Ownership

The average monthly payment for a new car has risen to $483. Just think about what you could do with $483+ extra per month. When it comes to owning a car, there are a number of other expenses beyond the monthly car payment. For instance, there may be a weekly need to fill up on gas and a monthly car wash, at minimum. You will also have to pay for car insurance, registration fees, car maintenance, and car repairs from time to time. The occasional car accident and parking tickets can also add a lot to the cost of car ownership. These basic and unexpected costs can quickly add up to an astronomical amount. (See also: How to Cut Car Ownership Costs)

According to a test conducted by Business Insider, one person's monthly cost of car ownership totaled more than $1,500 in San Francisco, while the cost of public transportation and Uber rides only cost $572 per month. This is an extreme example, as most people won't need to spend nearly this much on transportation, but the savings are obvious.

As a general basis, AAA estimates that the average person will spend $8,876 per year for a new sedan in an average city. To drive the same average amount using Uber, the cost would be $17,095 per year, which is about twice the cost of owning your own car. For this reason, Business Insider recommends using UberX if you drive less than 9,480 miles per year. If you drive more than that, Uber will actually cost you more in the end.

Paying for Parking

If you live in a large city like San Francisco, Los Angeles, or New York, you may also need to pay for parking, both on a monthly basis and whenever you are enjoying a night out. If you're on vacation, your hotel may also charge for parking, particularly if you're staying in the city center. Valet parking, and even self-park options, often total around $25 per night, and even more if those garages charge every time you enter.

How Often Do You Need a Car?

When it comes to owning a car or taking an Uber, you will almost always spend more on the costs of a car, unless you need a car on a daily basis. For instance, if you work from home and don't need a vehicle everyday, then paying for an Uber only when you need it can be a huge money saver. On the other hand, if you travel to work everyday, or live in the suburbs and need to travel for your daily needs, you may need a vehicle of your own.

Who Benefits Most From Uber?

Uber is a great alternative if you are living in a large city and don't need a car on a daily basis. It is also ideal if you don't currently have the credit or funds to purchase a car. On the other hand, even if you have a car, Uber can be a great option for a night you plan on drinking. Rather than trying to hail a taxi or depending on a friend to be the designated driver, you can simply use your app and an Uber will come to you when you're ready to go home.

For quick trips to the airport, Uber can also be ideal. For instance, the cost of parking at LAX can range from $5.95-$30 per day, depending on how far you are willing to park from the terminal, which can really add to the total cost of your trip. According to Time Magazine, if your longest round-trip is the airport to the hotel, Uber can save you money. If you are simply taking a short trip and won't be driving too far out of the immediate surroundings, Uber will be your most affordable, and most convenient, option.

Is a Taxi More Affordable?

According to MIT's Technology Review, taxis are more affordable for rides below $35. However, this all depends on where you live. In Canadian cities, you will almost always save money on Uber, compared to a taxi. To be sure, use an app like OpenStreetCab, PriceRide, or RideGuru to determine whether Uber, Lyft, or a taxi would be more affordable for your next trip.

When Is It Time for a Rental?

If you will need to use Uber from more than one consecutive day, you need to take a long trip, or you need Uber during surge pricing times, then a rental car may be the best way to go. In most cases, having a car at your disposal for both long and short trips is the most convenient option. However, in most cases, using Uber for infrequent traveling needs is your best bet. (See also: Save on Car Rentals With These 10 Easy Hacks)

Promo Codes

Each app, like Uber, Lyft, and Sidecar, offers their own promo codes, so it's in your best interest to try them all out with unique promo codes. You can also send invites to your friends and when they use your link or code to sign up, you will earn more free rides, so it's worth trying. (See also: How to Score Free Rides on Uber, Lyft, and Sidecar)

Alternative Options

Uber and Lyft have transformed the taxi game. There are now also alternative transportation options to improve your ability to get around, such as GetAround (peer-to-peer car sharing), Skurt (rental cars are delivered and picked up from your location), CarzUp (all rental cars in one location), and Swapalease (lease transfer options with no down payments). Make sure to compare the options and prices in your area before deciding on any one particular mode of transportation.

Have you lived a month or more on Uber? What have your experiences been with popular rideshare apps? Please share your thoughts in the comments!

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Guest's picture
Charmaine Diallo

Thanks for a simple way to think about transportation costs and options!

Guest's picture
Guest

You pay for that cheaper cheat ride by higher insurance rates and cost of living. Über doesn't cover drivers on their way to pick you up. They also don't cover the drivers that get hurt whether they have a passenger or not. Higher medical prices anyone. No the divers personal insurance company won't cover them. Extra coverage for the diver you say well after they pay for gas tires car insurance car washes phone and all the other expenses and get screwed by über on their cut of the ride the only one smiling is the billionaire owner.