DoorDash: my first "challenge" and money, the great motivator

When ride-hailing apps first launched and for some time afterwards, they aggressively recruited workers through promotions that would award bonus payments for hitting a specific threshold within a certain number of days. These promotions could be quite lucrative, even outlandishly so: I fooled around with Google’s search settings and found references to Uber signup bonuses of $1,000 after providing 150 rides in 60 days.

The appeal of these enlistment bonuses to the delivery companies was obvious: if someone does meet the bonus threshold, then the bonus is a small price to pay for an experienced, trained-up new driver. Some people will get close to the bonus threshold but not meet it: a 149-ride driver is almost as valuable as a 150-ride driver, but costs Uber nothing extra. And of course people who sign up, provide a few rides, then give up don’t cost the companies anything at all.

Some enterprising souls went so far as to buy burner phones and accept rides from themselves in order to both meet their bonus requirements and get where they were planning to drive anyway.

Those signup bonuses seem to have mostly disappeared, in some cases replaced by “guarantees,” where a company will “top up” your earnings at the end of your initial period if you complete the specified number of rides but earned less than the guarantee.

While I did sign up with a random DoorDash referral link I found online, as far as I know it didn’t have a bonus attached to it, so I didn’t have any experience with bonuses until mid-April, when I received my first DoorDash “challenge.”

My DoorDash challenge roughly doubled my income

On Friday, April 21, I got an e-mail offering me a $75 bonus after completing 15 deliveries between Saturday at 6 am and Sunday at 11:59 pm. The challenge only applied to deliveries in my “home” region, which I know because I was on the other side of the country at the time. However, I flew back Saturday night (on schedule, not to complete the challenge!), and knocked out the deliveries over the course of Sunday morning and afternoon.

For my 15 deliveries, I was working for about 5.5 hours of dash time and had about 4 hours of active time. For the deliveries alone, I earned $58.75 in base pay and $32.20 in customer tips, for a total of $90.95. After triggering the challenge, my total pay for the week was $165.95 (as I say, I was out of town the entire week except Sunday).

Taking the bonus into account, I earned a little over $30 an hour during the 5.5 hours I spent on DoorDash. I also realized that I’d be happy delivering for DoorDash all day if I could keep making $30 an hour doing it.

Money is a remarkable motivator

Since I was pursuing the $75 challenge, for both the money and the content, that Sunday I simply accepted the first 15 orders I was offered. This was a big difference from my usual practice. Indeed, my current order acceptance rate is just 60% — I decline nearly as many orders as I accept. That’s because I try to pick up and deliver within a relatively small area. Outside of my patch, the city is a labyrinth, and it’s boring, time-consuming, and dangerous to constantly be checking my phone for directions while I’m weaving in and out of one-way downtown traffic on a scooter or e-bike.

The reason I was willing to break my self-imposed geographic cordon is that during my challenge, every order I was offered had an embedded $5 bonus in it. A $2.75 order that I would normally reject out of hand was suddenly a $7.75 order. My highest order, for $13.75, was now an $18.75 order, more than worth the hazard of dodging lost tourists.

Identify (and minimize) your real costs

Whether it is worth taking an order, or working for a delivery company at all, doesn’t just depend on your income, it also depends on your expenses. I’m in a somewhat unusual position since I have free access to electric scooters and e-bikes, so when I’m delivering for DoorDash I’m trying to converting my time into money as directly as possible. I think I’ve spent less than $100 total on supplies, which basically consist of a bike helmet and reflective vest.

Most delivery workers have more expenses than I do. In many areas workers rely on private cars, which besides the purchase and financing costs also require repair, maintenance, fuel and insurance.

It’s common to refer to the federal deduction for business mileage, currently 65.5 cents per mile, to approximate those expenses. But the federal mileage allowance is a legal fiction. That does not mean it is not useful — many fictions are useful! — but you cannot pay your rent with things that are not true. Your actual income is what’s left after paying your actual expenses; that’s the amount of money you are being paid for your time.

Since a worker’s actual income is their actual pay minus their actual expenses, and the human brain is a powerful pattern-finding machine, people have come up with some funny ways to maximize the former and minimize the latter.

Desperate people control what they can

All of this was on my mind when I read this curious article in the New York Times. The whole thing is well worth a read, describing a subculture of delivery workers in Los Angeles who camp out near fancy restaurants turning down all the orders they’re offered except the ones they suspect will come with the highest tips. I do not think this is a very common phenomenon, but since they went to the trouble of tricking a journalist into writing about them, let’s humor them.

The logic is simple: if you can identify high-value orders in advance and only accept those, then you minimize expenses, especially fuel but also wear and tear on your vehicle. Indeed, if you keep your expenses low enough, you can end up with more income despite having a lower gross income than a worker that accepts every order.

There are a few glaring errors in the Times piece and a few points where the journalist simply didn’t understand what they were being told, but there are some very sharp observations as well. For example, since (outside of New York City, where it’s legally required to) it’s true that DoorDash will not display large customer tips before accepting an order, it makes perfect sense to “reject any order that shows under $11.50 in upfront pay, because there’s no chance of a ‘hidden’ tip” (DoorDash seems to be in the process of making changes to this practice, which I’ll describe in a future post).

When journalists ask DoorDash for comment on these stories, they invariably provide some version of the quote they gave the Times: “The data show that when Dashers accept more orders, they generally earn more during the course of their dash.”

While they obviously don’t provide their raw data to independent researchers, let along bloggers, I believe this is absolutely true from the perspective of DoorDash.

Remember, DoorDash does not know or care how much it costs for you to make deliveries. But they have crystal clear insight into how much they pay you and can account for every second you are using the app. I suspect all else being equal (starting location, delivery method, internal rating algorithm) there’s basically a linear correlation between the percentage of orders a worker accepts and their gross hourly pay.

But that still doesn’t mean you should accept every order. On the contrary, if your acceptance rate is 100%, your reserve price is almost certainly too low.

Establish a high, realistic reserve price

Economists call the amount of money you have to pay an idle worker to do a job instead of remaining idle that worker’s “reserve” price. It’s a useful concept, as long as you treat it cynically. Most importantly, it’s a completely different concept than what a worker’s time is “worth.”

That’s because in the time between accepting an order and completing a delivery, you’re not going to be offered the same orders as you would be if you were still idle. Since accepting one order excludes other orders, your reserve price should be “somewhat” higher than the actual value you put on your time.

If you value your time at $30 per hour, should you accept every order that pays the equivalent of $30 per hour? Of course not. In fact, doing so will virtually guarantee that your income is less than you consider it worth, accounting for both the time you are idle between orders and the orders you pass up by accepting those marginal ones.

Personally, I find it easiest to quickly evaluate orders by distance, and I put my reserve price at “about” $5 per mile. Unlike drivers, who have to consider things like traffic, weather, and road conditions, I’m virtually always traveling at top speed, which is between roughly 10 and 15 miles per hour, depending on what I’m riding.

That makes it fairly simple to tell how long an order will take to complete: on our dockless e-scooters, a delivery takes 6 minutes per mile, plus pickup time, plus delivery time. If the latter two add up to an average of 6 minutes per order, then a one-mile order will take about 12 minutes, and I can complete about 5 per hour.

As a rule of thumb, it’s flexible: for longer-distance orders I’ll sometimes go a little below $5 per mile, especially if the order is from a restaurant or to a building I know from experience is good at handling them. And there are areas I need a hell of a lot more money to deliver to. Not, needless to say, because I’m scared of the big bad city, but because navigating the warren of alleys that makes up our university, medical, and arms dealer campuses is almost always more trouble than it’s worth.

Does this mean I value my time at $25 per hour or that I earn $25 per hour? Not at all. It means that accepting only orders that pay $5 per mile or more will, across all my orders and all my time working for DoorDash, generate enough income to compensate me for my time, taking into account both time I’m idle and orders that pay much more than $5 per mile.

The right reserve price for you won’t be the same as mine, and it should naturally vary over time. But it should always be high enough to weed out low-value, high-cost orders, and low enough that your idle time doesn’t drown the time DoorDash is actually willing to pay you for.

And you can’t find a reserve price that works for you, then you can get another job!