TL;DR: Working for DoorDash is a decent, flexible way to earn some side income. The average DoorDash driver earns about $15 an hour, though the gig has some “hidden” costs, such as mileage and vehicle depreciation that can greatly offset your gains if you are not careful.
Delivery gigs have been a staple of the side hustle industry for generations. Delivery driving has always been a popular source of extra income for many because of the scheduling flexibility and general laid-back atmosphere of the job.
With the rise of food delivery apps, now anyone can pick up some delivery driving in their spare time to rustle up some extra dough.
DoorDash is one of the most popular delivery apps in the country. Over 100,000 people in the US and Canada work as “Dashers,” making millions of deliveries every year. Dashers can virtually make their own schedule so it has become a popular side gig.
We are all about encouraging the side hustle. So in this DoorDash review, we will examine the pros and cons of working for this crowdsourced delivery service.
What Is DoorDash?
Unless you have been living under a rock recently, odds are you have heard of DoorDash. For those not in the know, DoorDash is a crowdsourced food delivery service. DoorDash helps local restaurants and eateries outsource delivery so they can have a broader reach.
Whenever someone orders from a restaurant, the app connects with a “Dasher” who goes to the restaurants, picks up the food, and brings it right to the customers’ doorstep. Dashers get paid a commission for every delivery, plus tips from customers. Simple, right?
It is this simple model that has made DoorDash so popular. In 2019 alone, DoorDash pulled in over $900 million in revenue and is currently valued at over $16 billion as of June 2020. So it is no surprise that so many people want to get in on the deal.
How Does DoorDash Work?
Working as a Dasher is super simple. Once you create a Dasher Account you will be added to the service’s list of drivers. Whenever you want to work, just turn the app on and log in. The app will automatically connect you with delivery requests in your location as they come in.
If you see a delivery you want to handle, accept it from the list of opportunities. The app will automatically generate directions both to the restaurant and to the customer’s house. Simply pick the order up and take it to the address. You will get paid a commission fee + tips for every delivery you make. That’s all there is to it!
DoorDash Delivery Fees & Tips
So how, exactly, does DoorDash pay its drivers?
DoorDash drivers make money through three primary sources.
- Base Pay
Base pay refers to the base amount that DoorDash contributes to each order. Average base pay ranges between $2-$10. Unfortunately, nobody really knows how the algorithm calculates this amount, though DoorDash says it’s related to the distance, time, and current demand for the order. As such, Dashers who pick up orders from restaurants that are further away or that are not as popular will usually get a higher base pay rate. Base pay is entirely independent from other payment categories and is not affected by them.
DoorDash occasionally offers Promotions for orders that meet certain criteria. For example, during busy times, Dashers will get Peak Pay which adds some extra money to your total earnings. Challenges are an upcoming promotional offer that will offer drivers bonuses and incentives for meeting certain earnings thresholds for the week
Tips are self-explanatory. Drivers get 100% of all tips on all orders, no funny business. Customers can give tips through card charges or cash. Keep in mind that tip amounts never affect your base pay. As you might expect, drivers who offer quality service make more in tips.
Before you make each delivery, DoorDash will display an order acceptance page that lists your guaranteed pay for the order. The vast majority of divers end up making more than what is on the offer amount.
How Do I Sign Up For DoorDash?
Signing up to be a Dasher is pretty simple. You have to be at least 18 years or older, have a social security number, a valid driver’s license, and a car or other automobile. Some select cities will allow you to deliver by bicycle. You will also have to consent to and pass a background check. If you have a car or other automobile, then you also need to provide proof of insurance.
As you complete deliveries, you will get ratings from customers. Ratings are on a 1-5 scale with 1 being bad and 5 being excellent. Customer ratings will NOT affect your base pay but Dashers that have high ratings get priority for certain orders or promotional opportunities.
There is no minimum amount of orders you have to make to keep your account active. However, frequent late deliveries or customer complaints may result in your Dasher account being deactivated.
How Much Can I Earn Working for DoorDash?
Figuring out how much DoorDash employees earn on average is tough because the company does not disclose too much information about how much drivers make. However, looking at sites like Indeed and Glassdoor, the average DoorDash driver earns anywhere between $14-$18 an hour. In some cities, Dashers can make $25+ an hour.
The trick is, we don’t really know how much of those earnings come from tips and how much comes from base pay provided by the company. There is no reliable source on what the average tip for DoorDash drivers is either.
However, we can do a bit of math to get a rough estimate. In 2019, the average DoorDash order was $37.28. Assuming the industry-standard 15%-20%, that comes out to a tip average of about $5.50- $7.40 per order. The actual tip rate is likely lower than that amount though. The typical Dasher averages about 1-2 orders per hour, meaning that Dashers earn about $8-12 in tips per hour.
Keep in mind that these are just estimations and your actual earning rate will likely vary.
We also feel obligated to mention that DoorDash has come under public fire in the past for being accused of misappropriating driver tips. DoorDash has since changed its payment structure to guaranteed minimum contributions from the company for each order, though some are less than convinced that DoorDash has actually stopped the practice.
What Are the Costs You Cover?
If you just go by the hourly rate, DoorDash drivers earn a decent amount for the work they put in.
But, DoorDash drivers have to cover the costs of all their business expenses. This includes gas, data for your phone, car insurance, depreciation from wear-and-tear on your vehicle, and any applicable self-employment taxes. You only have to pay taxes on your net earnings after expenses. Often, you will be able to deduct taxes for certain business expenses such as mileage.
This is where earnings get complicated. The $14-$16 average pay that we mentioned earlier does not account for these costs. In some cases, these costs can dramatically offset your net gains. For example, according to payup.com, when you factor in these costs many Dashers end up making less than minimum wage. Payup.com estimates that average net earnings for Dashers is disturbingly low between $1.45/hr-$4.32/hr.
These figures vary heavily depending on location, amount of hours worked, average mileage for your car, and other factors such as whether the Dasher owns or leases their vehicle, and yearly insurance costs.
How Can I Maximize My Earnings from DoorDash?
Here are a couple of useful tips to maximize your DoorDash earnings.
- Set a desired hourly rate and fit your schedule to it. If you want to make $15/hr, then you would need at least 2 $7.50 deliveries per hour, or 3 $5 orders per hour, and so on.
- Short deliveries are almost always better. You might think that longer delivery = more pay. You are correct, but longer deliveries mean you spend more on gas and wear-and-tear on your vehicle.
- Take advantage of surge pricing and promotions. You can get a substantial pay bump if you take advantage of peak hours or the upcoming Challenges program.
- Learn your neighborhood. The better you know the streets, the faster you will complete deliveries and the better ratings you will get.
- Get good at parking. If you spend less time parking, that means your deliveries take less time and you can earn more money.
- Don’t be afraid to decline orders. You don’t get penalized if you decline opportunities. Maximizing your earnings means knowing which opportunities to take and which ones to pass.
- Use a bike (if you can). Some cities allow Dashers to deliver on bicycles. Bike deliveries are great because you don’t have to worry about costs from gas and car maintenance (and you get a workout with each delivery!).
DoorDash Pros & Cons
- Extremely flexible scheduling. You can work as much or as little as you want.
- Laid-back atmosphere. You can listen to your favorite music/podcasts/etc. when doing orders and there is no boss to report to.
- Good opportunities to increase your earnings. Peak pricing and the upcoming challenges give you ways to get paid more and get rewards.
- Guaranteed pay. You will always receive a guaranteed amount from each delivery.
- Gross earnings can vary heavily depending on location. Generally, Dashers in urban areas and cities make more money.
- Lots of hidden costs. The most relevant ones are gas, vehicle depreciation, repairs, and taxes. These costs can seriously impact your gross earnings if you do not account for them appropriately.
- Some lack of consistency. Some days there will just not be that many orders around and there will be nothing you can do about it.
Conclusions: Should I Work as a Dasher?
So, is working as a Dasher for DoorDash a good idea? We say yes, but with some caveats. DoorDash offers a simple and flexible way to make some money on the side. But you need to make sure that your costs don’t eat into your earnings. There are several apps out there that can help you keep track of the relevant business costs so you can maximize your earnings.
So, as long as you are being diligent, then you should have no problem making decent money on DoorDash. Even if you only deliver 1-2 nights a week, that is still some extra cash in your pocket for saving or spending.