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What DoorDash pays, after expenses, and what’s happening with tips

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Re: What DoorDash pays, after expenses, and what’s happening with tips

#471

Post by squiggleblaz »

analyst74 wrote: post #410
s_dev wrote: post #260

Earlier quoted context omitted.

>Secondly, you have the option of giving a nice tip. DoorDash is litterally taking the tips left for the staff though ...

That not true anymore

Read the article. They say they don't take tips, but the relationship between tip and actual pay is so arcane, that driver payment is higher when you tip $1 than when you tip $8. Obviously they don't know what the algorithm is, but it's not as simple as "we'll pay the driver the delivery fee and keep the service charge, and you can give them something on top of that". It's more like "we'll take as much of the tip, the delivery fee and the service charge as we possibly can get away with, even though that's completely in contradiction to what the purchaser thinks their doing".

Re: What DoorDash pays, after expenses, and what’s happening with tips

#473

Post by beatgammit »

asdfasgasdgasdg wrote: post #365
mlyle wrote: post #187

Earlier quoted context omitted.

Though it's not likely too distorted, because the average hourly gross pay was similar to what DoorDash cites [we can't tell how close because DD doesn't explain their exact methodology]; just the net pay is very low.

I reread the article. What's super distorted is how they're calculating expenses. Sure the IRS will let you deduct 58c per mile, but that doesn't mean that's what it actually costs. Unless you're stupid, you use an intelligent car like a used Corolla or Fit for a job like this. Maybe a nicely used Prius. A sensible driver would incur expenses of about 20c per mile. So that means their estimate of expenses is about 20…

I estimated about $0.25/mile, which includes insurance, repairs, and depreciation. Gas is- insurance - $100/6 months for a second car (from when I was debating selling my second car) - repairs - $400/year (I do most of the routine work myself) - depreciation - $1000/year - misc fees - $150 (registration, parking, occasional tickets, etc)

My second car costs >$1500/year. I bought it used (~7 years old) for $10k, and I've had it for 5 years and it's currently worth ~$5k, so my depreciation estimate seems reasonable, perhaps conservative.

If I drive 10k miles/year (I drive less), that's >$0.15/mile + $0.07/mile (~40mpg Prius), so $0.25/mile seems like a decent low end estimate. If you drive more, depreciation will be higher.

Re: What DoorDash pays, after expenses, and what’s happening with tips

#474

Post by eigenvalue »

leppr wrote: post #458
eigenvalue wrote: post #448

Earlier quoted context omitted.

If those refugees are grateful for the opportunity to work and earn, and are in much better conditions now than in the countries they fled, and also wouldn't necessarily qualify for higher wage jobs because of language/cultural/educational barriers, why is that so bad? And if it allows more prosperous Swedes to enjoy the convenience of food delivery for a cost that they think is worth it, is that so terrible? To me,…

The problem is the market isn't efficient, and the middlemen (Uber, DoorDash, ...) are getting an outsized share of the revenue relative to their only essential contribution which is (automated) organization. They are only able to command that percentage because regulations filter out potential smaller undercutting competitors. That's also why they fail in "developing" countries with more relaxed policing. Not becaus…

If they really aren't adding enough value relative to what they extract, then they are opening up a competitive weakness that eventually should be exploited by a new entrant in the marketplace. Right now, the whole area is being opened up by these intermediaries, which are spending enormous amounts on marketing/advertising/promotion to increase customer awareness of the offering and to establish relationships with restaurants. Once this market is developed, a new entrant with a comparable offering but much lower take rate could make sense-- so long as they are very efficient and low cost in providing this service. The fact that DoorDash is making zero/negative profit now suggests that they aren't taking too much of the pie. If they were, they simply wouldn't be able to recruit couriers once the word was out that it was a bad deal.

Re: What DoorDash pays, after expenses, and what’s happening with tips

#475

Post by chipperyman573 »

lotsofpulp wrote: post #324
chipperyman573 wrote: post #32

Earlier quoted context omitted.

People don't realize it is a net negative and just think about the $3 they'll be getting

Maybe for a day or a week. How can they not realize when they have no money at the end of that?

Because you don't get your car repaired every week

Re: What DoorDash pays, after expenses, and what’s happening with tips

#476

Post by squiggleblaz »

Drakar1903 wrote: post #269
PanosJee wrote: post #235

Earlier quoted context omitted.

Economy of scale applies to production think chips & screens. What economy of scale can DoorDash achieve? Persuade everyone to be paid below fair wage? Push the margin of restaurants down?

I see a kind of future where restaurants are reduced to a kitchen and packing area, with no seats. Then several kitchens bunched together to save on rent and utilities. Then cut out the drivers with air or land based drones. Then start lobbying so that the drones can move underground, and new buildings have to include a drone delivery vent / conveyor belt. You already can live your whole life and never leave a house,…

> I see a kind of future where restaurants are reduced to a kitchen and packing area, with no seats. Then several kitchens bunched together to save on rent and utilities.

Isn't that a food court? I'm not sure you've described a particularly grim future. I mean, there's lots of grimness in the future. But you haven't described it.

Re: What DoorDash pays, after expenses, and what’s happening with tips

#477

Post by dsr_ »

swiley wrote: post #425
dsr_ wrote: post #412

Earlier quoted context omitted.

The article points out that for many DoorDash workers, they aren't getting paid a positive sum, even if they count their time as worth zero. Look, we have the technical ability to handle millions of people as hourly workers on timescale granularities of seconds. Require these companies to treat their "contractors" as part-time employees being paid minimum wage: start paying them when they accept their first job on da…

I'll agree you absolutely have to watch what you're doing and count miles and whatnot, but having the option is a powerful thing (even when you're making negative money) and I wonder if regulating it too aggressively might take that away.

I am 100% ok with using regulation to take away the ability to earn negative money.

Re: What DoorDash pays, after expenses, and what’s happening with tips

#478

Post by dragonwriter »

devmunchies wrote: post #457
dangus wrote: post #424

Earlier quoted context omitted.

.

drivers make $400-500 per week in tips. you can buy a car for that. > Why should they work for you when they could work there (Aldi) Why work for Aldi when they can work for Dangus?

> drivers make $400-500 per week in tips

At the $3 tip per delivery you cite, that's 133-167 deliveries. It's not improbable that the all-in cost of driving is $1+ per delivery, also tips of more than $20/month are taxed (at the full value of the tips) for both income and payroll tax (unlike, incidentally, mileage reimbursement up to the IRS limit of $0.58/mile which is completely tax free.)

Re: What DoorDash pays, after expenses, and what’s happening with tips

#479

Post by beatgammit »

JackFr wrote: post #146
pbreit wrote: post #100

Earlier quoted context omitted.

Not necessarily. I think it’s a combination of easy money and lack of understanding of net income.

When you have no money net income is pretty damn obvious. I'd argue instead that they're actually pretty rational. The job requires no training and is untaxing both physically and mentally. Despite driver complaints, it's much more flexible than the vast majority of unskilled jobs. I'm sure for most long term drivers, the job basically sucks -- but it's still better than their next best alternative.

It's certainly better than getting a payday loan or something, but there's a good chance many workers are operating at a net loss, especially if they don't do their taxes right (e.g. claim a deduction for car expenses).

Couple this with the general lack of financial education among the populace (40% would have trouble with an unexpected $400 expense, 20% don't have $400 in their bank account) and we have a real problem.

As a society, we need to do a better job of teaching people how to evaluate opportunities. Driving 10 miles for a $3 delivery is probably a net loss, unless you can work out a clever tax arbitrage system (e.g. it costs you $0.25/mile to drive, but you deduct $0.50/mile on taxes).

- [1] https://www.cnbc.com/2019/07/20/heres-why-so-many-americans-...

Re: What DoorDash pays, after expenses, and what’s happening with tips

#480

Post by squiggleblaz »

Spivak wrote: post #396
squiggleblaz wrote: post #370

According to the article, the standard delivery fee is 5.99 and there's a 10% service charge. Surely the purchaser thinks "I'm paying 5.99 to the driver and 10% to DoorDash". It feels like theft. The company is telling the customer one thing, the driver another thing, and stealing the difference.

I have never assumed that the "delivery" and "service" fees went straight to the driver. The "delivery fee" is the premium I pay to get my food delivered and the "service fee" is the premium I pay for using X service to place the order. Trying to assume anything about where each dollar goes once you pay is a little silly. Those line items are prices for services. I mean when you order Papa John's for example they tel…

Hi, that's not what I said. If I go to AirBNB, it has a cost of the rental and a service fee. I assume that the rental cost goes to the owner, and the service fee goes to AirBNB.

And likewise, if there's a delivery fee and a separate service fee for a delivery, I would assume the delivery fee goes to the one who does the delivery and the service fee goes to the middle man. What's the point otherwise? Why not just merge them into one single fee?

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