Uber and Lyft drivers say they're earning less — so some are starting their own ride services

• Some Uber and Lyft drivers are starting businesses driving people they've met through the apps.
• It's more profitable and offers better autonomy, four drivers told Business Insider.
• Uber and Lyft drivers can make as little as $3 a ride, pushing some to look for alternatives.

Brian started driving for Uber in California in 2013. At the time, it paid enough to be his full-time job.

Since then, working for the ride-hailing app has become less profitable, he said. But Uber and its rival Lyft still play an important role in his work — to recruit customers for his black-car service.

"I get a lot of people that I pick up randomly on Uber asking me, 'Hey, do you do private rides?'" Brian said in an interview with Business Insider. "And I say, 'Yes,' and I give them my business card, and if they want to book me, I'm happy to give them a price quote."

Brian is one of four drivers who told BI about starting his own business offering rides outside Uber and Lyft. He and the other drivers interviewed for this story asked that BI not use their full names for fear of being deactivated by Uber and Lyft. BI has verified their identity and work for the apps.

All four have had a similar experience: Driving exclusively for Uber and Lyft used to pay well, they said. But over the past few years, ride-hailing drivers' earnings have fallen to as little as $3 a ride. They say their businesses offer customers more reliable, higher-quality rides than they can often find on the apps — and sometimes, for less money.

Drivers pitch Uber and Lyft customers

About half of Brian's trips come from his list of private clients, he told BI. The other rides he still finds on Uber and Lyft, mostly to fill in what some drivers call "dead miles" — distances driven to get to or from a ride, which the apps don't compensate drivers for.

A trip for a private client could involve picking someone up at 3:30 a.m. to go to the airport or driving to and from a baseball game on the weekend. Those trips tend to make him more money than similar routes on the apps, he said, since Uber and Lyft aren't taking a share of the fare.

Unlike his experience with the apps, he's gotten to know many of the people he drives for, which he said helps generate repeat business and get him new customers.

"I won't advertise, but someone will post me on the Nextdoor app like, 'Hey, this driver is good, reliable — his prices are reasonable.'"

When BI asked whether drivers can pitch their own businesses while on a trip for Uber, an Uber spokesperson said the app's drivers are independent contractors. The spokesperson also referenced company statistics that Uber drivers make more than $30 an hour "while active on the app."

A Lyft spokesperson referenced the company's terms of service, which state that drivers can have other employment "including but not limited to providing services similar to the Rideshare Services to other companies."

Making money on Uber and Lyft is harder, some say

Torsten Kunert, a ride-hailing driver and YouTuber who makes videos about the industry, said he's noticed more drivers trying to develop their own businesses over the past year and a half. He offers an online course for drivers looking to make the change, with advice ranging from pitching Uber and Lyft riders on their services to navigating commercial insurance.

Riders are often looking for a better deal. Kunert said that he often prices his rides for private clients below the going rate for a similar trip on Uber. Prices for various app-based services, such as Uber and Airbnb, have increased over the past few years as the so-called millennial lifestyle subsidy has dwindled.

"The rider and the driver are pretty much experiencing the same story, really," he said.

Offering private rides has its costs, Kunert said. Drivers have to buy their own commercial insurance and develop their list of clients. Many drivers who start their own businesses also drive high-end vehicles, such as luxury sedans and SUVs, which can involve a higher monthly auto loan or lease payment, he said.

The drivers BI spoke with said the switch was worth it.

Phil, an Uber driver in Ontario, Canada, told BI he offers rides around his town for 10 Canadian dollars regardless of distance. He still occasionally works for Uber, picking up similar rides for 3 or 4 Canadian dollars just to pitch riders on his private service. "The pay is so poor," he said.

One driver in San Diego who runs his own black-car service told BI that he drives a Cadillac Escalade and mostly serves business clients who pay him more than he would make on Uber's black-car service.

It's more work than just picking up trips through Uber or Lyft. The driver said he spends more time cleaning his car and texting clients to set up rides than when he relied on the apps for work.

But he said his earning potential has gone up. Some clients pay him $100 an hour to wait outside business meetings just so they can have a car ready to leave as soon as they're finished, he said.

Many drivers for the apps are "just saying 'this is not worth it anymore,' or they're becoming independent contractors on their own," he said.

Kunert said many drivers he advises enjoy not having to worry about Uber or Lyft deactivating their accounts or figuring out whether the pay the apps offer for a trip will make them any money.

"You truly, for the first time, you step into your self-worth, and you become a true independent contractor," he said.

Do you work for a ride-hailing or gig delivery service and have a story idea to share? Reach out to this reporter at abitter@businessinsider.com.