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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

#481

Post by beatgammit »

PhasmaFelis wrote: post #129
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.

Even the most clueless and innumerate person is going to notice when they've been working and getting paid for a month, haven't paid any bills yet or bought anything but food and gas, and still have $0.

The problem is that gas is a small part of the equation. You also need to account for depreciation, increased repairs, and opportunity costs (e.g. Uber may require a newer car than you'd otherwise get). It may look like you're making money because you make more than you pay in gas, but I'm guessing people aren't noticing that their day job is subsidizing their side hustle for infrequent expenses.

I use the IRS figure of ~$0.50/mile to ball park an opportunity. When I calculated it for my car, I got closer to $0.25/mile, but that's because I got a good deal on a reliable, used, efficient car (~$10k for a 60k mile Prius) and I do most of my own maintenance. The average driver (having a shop do repairs, worse mileage, buy from dealer with loan) will likely be closer to the IRS figure.

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

#482

Post by no_flags »

I don't think using the IRS mileage number is an accurate way to calculate costs of operating a vehicle for a couple reasons.

Consider this report from AAA: https://exchange.aaa.com/automotive/driving-costs/

Notice that the cost per mile actually goes down the more miles you drive! You have to drive 20,000 miles to get down the ballpark of the IRS number. This indicates that expenses affected by mileage like gas, maintenance, and depreciation are dominated by up front costs like insurance and taxes. Now consider that most door dash drivers already chose to have a car before working for door dash, so they will have to pay the up front costs regardless. For this reason, I don't think $0.58 per mile is a good estimate of the marginal cost associated with extra driving for door dash. The AAA report estimates gas and maintenance costs per mile at $0.17 to $0.23 depending on the type of car.

Second, I don't believe it is right to include depreciation in a household budget because it does not manifest as an additional cost on top of the price of the car. Unless the car is listed as a line item on your household budget, you don't have to account for any additional loss in value. Imagine that you bought a car in cash for $1000 and never drive it. You lose the $1000 immediately. If some years later the car is worth $0, your total cost of ownership is still just $1000, not $2000.

I believe the fact that people still chose to work for door dash is additional evidence that the estimated costs in this article are too high. We may not be perfect rational actors, but most of us can tell if our bank account is going up or down.

None of this excuses the unethical behavior of door dash, and personally I choose not to use them. I believe tips are intended as a gift to the driver, so it is misleading to call it a tip if the driver isn't getting it. That said, I didn't find this analysis convincing for the reasons above.

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

#483

Post by rchaud »

umvi wrote: post #423
mabbo wrote: post #411

Is anyone else starting to get the feeling that "gig economy" is this generation's "multi-level marketing"? People who don't know any better get sold on the "be your own boss, earn what you put in" concept. Reality doesn't match expectations. The people work their asses off and wind up with a lot less money than they expected because costs and actual spent time aren't taken into account. The people they're working fo…

There's another disturbing trend I've seen on Facebook. It's where these moms become "entrepreneurs" but when you dig into what their business actually is, they basically host these paid sessions on how to be an entrepreneur (setting up branding, etc.). As far I can tell, no actual product or value is generated, it's like a "business virus": "I'm an entrepreneur!" "Cool, what does your business do?" "Help people get…

This is hardly restricted to MLM mom groups. What you've described is the cornerstone of every "motivational speaker" business model. You know, the types buying pre-roll ads on Youtube before any and all self improvement videos, promising they'll tell you all their secrets if you sign up for their $500 online course, but available for a limited time for $20.

The same goes for "thought leaders" selling "masterclasses" on "building an online business" or "blogging from home". I won't even touch on the crypto space which is full of these charlatans.

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

#484

Post by rchaud »

franga2000 wrote: post #299
wolco wrote: post #213

Earlier quoted context omitted.

Canada, Africa and the Middle East.

Why do I keep expecting Canada to be better than it actually is? Although, a quick web search shows that at least in Quebec, minimum wage for tipped workers is 1.9$ lower vs. not applying at all in many US states - better, but still sad.

Yes, tipping culture is alive and well in Canada. A common misconception among foreigners is that the existence of universal healthcare means Canada also shares the economic structures of Scandinavian countries. It doesn't. Canada's economy is structured similarly to the US, but much more dependent on natural resources.

The service sector is actually considered to be a low-cost offshoring center for American businesses, due to lower median salaries, and a weak Canadian dollar.

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

#485

Post by squiggleblaz »

darawk wrote: post #208
mlyle wrote: post #181

Earlier quoted context omitted.

Because these exploitative schemes displace other delivery jobs and services that work under fairer terms.

These businesses are already unprofitable. So you probably couldn't have another DoorDash that pays its workers more. I suppose you could argue that some restaurants might have their own delivery services, or something. But that'd be tiny in scale compared to what these services are doing.

A tiny delivery service based around a local group of restaurants could easily have a fairer distribution of income and time consumed. Since the delivery service operates from about five or ten shops there's no "drive 10 miles to the pickup". Since the service is basically local there's no "take money from the poor and give it to the richer" - even the profits that go to the capitalists is still going to local members of the community who are making some money, but not too much to know what to do with. "Unprofitable" is relative.

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

#486

Post by jfengel »

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…

I think, however, most people assume that whatever the price is, the majority of it will go to where the costs are (a human being with a car), and only a tiny amount will go for the cheap stuff (an entry in a database). The middleman's costs are higher than you think (servers, software, credit card fees, etc.), but you still expect they're measured in dimes, not dollars.

If they're taking dollars where they should be taking dimes, you expect somebody else to come in and undercut them. So customers expect that most of a $10+ fee is going to go to the driver, regardless of how that fits into the structure.

That's clearly not the case, and the real question is why. It's not profitability.

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

#487

Post by JoeAltmaier »

squiggleblaz wrote: post #485
darawk wrote: post #208

Earlier quoted context omitted.

These businesses are already unprofitable. So you probably couldn't have another DoorDash that pays its workers more. I suppose you could argue that some restaurants might have their own delivery services, or something. But that'd be tiny in scale compared to what these services are doing.

A tiny delivery service based around a local group of restaurants could easily have a fairer distribution of income and time consumed. Since the delivery service operates from about five or ten shops there's no "drive 10 miles to the pickup". Since the service is basically local there's no "take money from the poor and give it to the richer" - even the profits that go to the capitalists is still going to local member…

Consider: restaurants often consider delivery to be a 'loss leader'. It's not a terribly profitable industry, maybe not at all profitable. A more limited service (unable to average costs over a large number of restaurants and customers) is going to be even less so?

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

#488

Post by coryfklein »

Tipping is an outdated social concept that needs eliminating. If my Costco cashier is a dick to me, I report that to his manager and he gets disciplined. If my Costco cashier is super slow, his manager notices and he improves or gets fired.

Now why does this whole incentive/reward model get flipped on its head when this person is delivering food to my table (or door)? If my DoorDash driver takes a long time, I have NO IDEA whether that's because traffic was bad, there was snow on the road, the restaurant was busy, etc. What is even the purpose of the tip?

I'm more and more convinced, especially after doing a 7-day cruise last week, that tips are kept in place by the establishment merely as a way to lower perceived prices. DoorDash wants to charge you $25 for something, but advertise that it only costs $20. DoorDash is in a much better place than I to detect patterns of performance in their employees, as are restaurant managers, haircut salons, the list goes on.

In the end, the world would be a better place without tips. Those most capable of monitoring service quality would be stuck with that responsibility, prices would be communicated transparently, and, above all, total prices wouldn't even change anyway!

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

#489

Post by burlesona »

danans wrote: post #209
burlesona wrote: post #67

What I struggle with is why anyone would deliver for Door Dash if the pay is so bad. The article closes with a statement that they want $15/hour plus expenses for drivers. The obvious problem is that I can’t see customers paying that much for delivery - ie. at those wages Door Dash can’t exist. The fact that people choose to do the work makes me think there are people who find it worthwhile, and I can explain a few s…

> The real problem seems to be that there are so many people in need of “family feeding” jobs who are working for Door Dash etc. instead. All jobs are basically a means for feeding your family, even if that family is just you. Few people work primarily for the fun of it. The people taking the gig jobs to feed their families are often desperate, with few other options. They aren't taking the gig jobs by mistake. And c…

I have to gently disagree with part of what you said. In my life experience there are a lot of jobs that are taken by people who are not looking for what I called “family feeding” work (which I agree includes families of one), but rather for “spending money.”

Many high schoolers take jobs that fall into this category: they have parental support and don’t _need_ money, but they want to have some cash for their own entertainment.

These days I know a lot of married couples where one of the two earns a comfortable income such that the other doesn’t _need_ to work. The other person in that case often takes on volunteer work, but also often takes on “gigs” that come with very low pay but perhaps “gas money” or something like that.

I don’t think there’s anything morally wrong with that kind of “token payment” work, because it doesn’t hurt anyone.

My closing point was, to me Doordash and other gig jobs seem to basically be suitable only as “spending money” or perhaps even “token payment” jobs, and yet some people (perhaps many?) are taking them as “family feeding,” work.

So (1) it really concerns me that this is happening, because it is strong evidence that we don’t have enough “family feeding” work available and there are a lot of people really hurting as a result. To me this is the main problem we should be talking about.

And (2) I don’t really understand the outrage at gig jobs for not being “family feeding” jobs. If the work is lousy, don’t do it! That’s not something the government needs to punish - there are plenty of these sub jobs out there that aren’t hurting anyone.

Except then we’re back to (1) - lots of people are so desperate they’re taking a gig and depending on it... which is scary. So how can we create more good quality work for people so they just give door dash the finger and move on, rather than feeling trapped in that as the best work they can get.

I hope that makes sense. It’s a tough topic.

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

#490

Post by dmode »

paulddraper wrote: post #190
dmode wrote: post #160

Why can’t we have normal businesses where you employ your workers and charge your customers the real cost of the transaction ? If that is not viable, don’t start the business to begin with. Let’s just go back to first principles, can we ?

We can have those businesses. They just don't make as much money, so are inferior. Unless of course, customers don't tip. Then your suggestion is not an inferior competitor.

I mean Apple built a trillion dollar business by charging customers high prices with huge margins
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