Doordash has not changed their pay model, but Doordash base pay has been dropping all the same.
Doordash did cut minimum pay in Summer of 2021. And in the spring and summer of 2022, Doordash was caught cutting base pay on longer distance deliveries. Of course they won't tell you that, they want you to believe they're helping drivers with higher gas prices.
Why is Doordash cutting their minimum pay? How can drivers continue to make it when pay goes down while gas prices go up? And how can I say they haven't changed the pay model but they've cut pay at the same time? How can both be true?
The Doordash pay model is still technically the same model they rolled out in September 2019, after being accused of stealing tips in the old model.
The truth is, they never really had a pay model. We'll talk about that in a bit. And we'll dive into all things Doordash base pay, and why Doordash feels the need to pay less and less. We'll discuss:
We'll look at the Doordash pay model. In this article we'll discuss:
- How is Doordash base pay figured?
- Why do I say there is no Doordash pay model?
- How did Doordash cut the minimum pay in 2021?
- Why is Doordash cutting Dasher base pay?
- Will Doordash cut base pay again?
- What's the best way to respond to low base pay from Doordash?
How is Doordash base pay determined?
Doordash says base pay is determined by distance, duration, and desirability of a delivery. The real answer is that base pay is the least amount they can get away with paying.
Doordash doesn't publish their formula. There's no transparency. And the fact of the matter is that when Doordash gives out the minimum on deliveries over nine miles, distance and duration seem to have nothing to do with base pay.
In other words, Doordash lies. That's not the first time you'll hear me say that. It won't be the last.
The official pay model is that Doordash base pay ranges from two to ten dollars.
Base pay is DoorDash’s base contribution for each order. This will range from $2-10+ depending on the estimated time, distance, and desirability of the order. Deliveries that require Dashers to travel a longer distance, that are expected to take more time, and that are less popular with Dashers will have a higher base pay. Base pay will not change based on the customer tip amount.Doordash description of their pay model most recently accessed July, 2022.
They never say how any of those things are figured in.
What is desirability?
Doo rdash couriers have the right to accept or reject delivery offers. Usually they will decide based on a factor of how well a delivery offer pays for the time, effort and expense involved.
The customer tip is a huge factor in whether an offer is desirable. If the base pay is only $2 and there is no tip, that delivery offer is going to be rejected frequently. Thus Doordash might increase the base pay due to “desirability.”
Do you see what happened here? Doordash just said that “base pay will not change based on the customer tip amount.” Yet if the tip amount means that an order is not desirable, and base pay goes up based on desirability, didn't they just lie about the tip's impact?
I told you that earlier comment wasn't the last time I would say Doordash lies.
The truth is, Doordash still uses the customer's tip to determine base pay.
That's what “desirability” is all about.
The old Doordash pay model officially just a flat fee of $1 base pay plus tips.
However, they offered a guaranteed minimum per delivery, and if the dollar plus tip didn't meet the minimum, Door dash made up the difference.
While their wording was that base pay was a dollar, in practice base pay was calculated as minimum pay minus the tip amount.
Some used that to say Doordash was stealing tips under the old model. Technically, drivers were still getting the total tip amount, so they weren't actually stealing tips. However, the way they used customer's tips to calculate the base was shady enough that it became a PR nightmare.
It got to where Doordash CEO Tony Xu announced they would change things, and they switched to the the current model in September 2019. I commented back then that with the desirability factor it essentially made the new pay model a differently worded version of the old pay model
At the time, I said meet the new pay model, same as the old one.
Base pay isn't the only pay Dashers get.
There are three things that impact how much money you can make delivering for Doordash in the United States or Canada: Base pay, promotions and the customer tips.
The pay model basically boils down to Base pay plus incentives plus tip.
And of course, there's Prop 22 in California that throws in another wrinkle. The total hourly rate from Doordash (not counting tips) has to total at least 120 percent of minimum wage for active delivery time plus 30 cents per active mile.
Incentives and promotions include any offers Doordash may put out to sweeten the pot and encourage people to deliver more.
Promotions and incentives
Because companies cannot control the schedule of contractors, Doordash has to find other ways to get enough people out to handle the demand when things get really busy.
One way they do that is to offer incentives and promotions. They pay extra to encourage Doordash drivers to get out at peak times when Doordash delivery drivers are needed most. This often happens during either in inclement weather, peak hours, or special events where a lot of people are ordering in.
The most common promotion is their Peak Pay incentive. Doordash offers a certain amount of extra money per delivery in a certain region at a certain time. I've received as much as $12 extra per delivery (during a snowstorm). Even in normal weather, I still often see $1 and $2 peak pay promotions.
Another option that Doordash uses is what they call challenges. In January, 2021 they offered $200 extra for any Dashers who completed 450 deliveries between January 5 and January 31. That's nearly 17 deliveries per day every day during that period, which is a substantial commitment.
I have seen some smaller challenge bonuses pop up, such as 25 food orders or other deliveries over two days. Generally the challenges slow through the summer and pick up in the winter.
Do not mistake these incentives and promotions as bonus pay. This is not Doordash doing the right thing and taking care of their independent contractors.
Some think that higher peak pay is hazard pay especially for delivering in bad weather. Door dash doesn't care about that kind of thing and it's not in their nature to pay drivers just to take care of them.
Incentives are for one thing and one thing only. That one thing is to get enough people out delivering to meet their demand. When Doordash needs gig workers out on the street, they offer higher pay.
If they have enough Doordash couriers to meet the demand, incentives dry up.
Of course, the other element in Doordash pay is the customer tip. The truth is, Doordash relies heavily on those tips to make sure drivers get paid.
In fact, your best strategy is to look at the total pay as your actual earnings. It really doesn't matter how much the tip is and how much the Doordash platform is paying, it's all about the total money you make.
Doordash customers can add a tip when they place the order. Doordash's website (or the Doordash app) defaults to a certain tip amount depending on the order and if the customer doesn't change anything, that default tip is added to Driver pay.
The question here is, how much is Doordash recommending? I often compare orders for the same food from different food delivery services, and Doordash's recommended tip is often far lower than those by Uber Eats or Grubhub.
Supposedly, the entire tip is given to Doordash drivers on top of the base pay and incentives. I have yet to see evidence to the contrary. Usually the total of base pay, incentives, and customer tip are included in the amount that is displayed on the Dasher app when a delivery is offered.
Unless of course Doordash hides the tip. There is no tip transparency. But those are other topics for other articles.
Why do I say there is no Doordash pay model?
The problem lies in Doordash's own description. Base pay “will range from $2 to $10.”
There is no explanation as to how Doordash calculates their base pay. Doordash will not provide a formula. All they do is give a vague description that it's based on time, distance and desirability.
I took several long distance deliveries (where total mileage was five miles or longer) just to see what pay was like. Doordash definitely wasn't paying much extra (if any) for the distance.
In fact, it's kind of amusing what Doordash said when they made a change in minimum pay in the summer of 2021:
We believe every order should be worth your time, but up to this point, you were paid similarly for both long distance orders and shorter trips.Doordash notification about changes in how Dashers earn, dated June 15, 2021
Was that Doordash admitting they lied previously? It sure looks like it to me.
If time and distance are factors, and have been factors since September 2019, why is Doordash paying similarly for long distance orders as they do shorter trips?
Maybe those things never were factors.
But with Doordash, there's no real rhyme or reason. There's little or no pattern.
In the end, base pay from Doordash is arbitrary. How much Doordash pays is whatever they think they need to pay to get the order delivered.
That's not a pay model.
But didn't Doordash just change the pay model in the summer of 2021?
No. There was no new Doordash pay model.
They did send out notices that said there were “Updates to how you earn.”
First, you can't change what doesn't exist.
Second, nothing changed in how Doordash defined their pay. It remains the same: $2 – $10 based on time, distance and the desirability of an order.
But didn't Doordash drop their minimum pay?
Well, sort of no.
They didn't change their official minimum pay. They did change their PRACTICED minimum pay.
Doorash's minimum pay is $2. That has been their minimum base pay ever since implementing this model more than two years ago. They have never changed that. Two dollars remains the minimum.
$2.50 is not the minimum. Neither was $3.
Those are practiced minimums, not actual minimums. There's a difference.
But what about Doordash's “Updates to how you earn?”
Doordash has been notifying Dashers that there were updates to how Dashers earn. The changes appear to have been rolled out to different markets, and I'm not sure yet if the changes have been implemented nationwide.
Doordash did say they were changing some things about base pay. Here's a screenshot of the notice I received:
This was not a change in the pay model. This was a change in how they were implementing the pay model.
When Doordash rolled out the current pay model, two dollar base pay was very common.
By spring of 2020 (when the Pandemic was forcing shut-downs) we saw Doordash start offering at least $3.00 for a delivery. If a second delivery was added on, base pay on the added delivery was usually $2.
Again, three dollars was never the official pay model.
In the announcement above, Doordash announced that you may now see a base pay as low as $2.50.
In return, they claimed they would start paying more for longer distance deliveries. They gave an example of a seven mile delivery that previously would have paid $3.50 and now would pay $4.75.
While the pay model didn't change, Doordash essentially put this out there to prepare people for the fact that the practiced minimum amount was dropping from $3.00 to $2.50 in the market.
The truth about this announcement: They lied. Again.
Obviously they didn't lie about dropping the base to as low as $2.50. That's happening all over the place.
What Doordash lied about was the extra pay for longer deliveries.
I charted deliveries by distance since that announcement. I never saw any 7-8 mile deliveries that had as much base pay as the $4.75 they used as an example.
When I first wrote about this change, I had taken a long delivery that was taking me back towards home. It was 12.9 miles and base pay was $3.
To make matters worse, Doordash silently started eliminating that extra pay after rolling out the 10% cash back program they offered Dashers when using the DasherDirect card. They sent out press releases announcing how they were helping Dashers with rising costs of gas.
And of course, Doordash never told anyone they were paying for that by cutting base pay on long distance deliveries.
The bottom line is, Doordash lied about paying more for longer deliveries. It's all a story made up to make it easier to drop the base pay on minimal orders.
Why is Doordash cutting base pay for Dashers?
Doordash is leaking money.
In the past, Doordash could just get another round of funding from investors and keep spending.
But then Doordash went public. And while that often means they could just sell more stock, that's not as easy to do when the value of Doordash stock plummeted from nearly $246 in November, 2021 to under $62 in just seven months.
Even worse, Doordash lost 52 million dollars of free cash flow in the first quarter of 2022 (down from positive $134 million a year earlier) even though income was 35% higher in that same period.
As Mark Hake said in Yahoo finance, “that means Doordash is digging itself into a hole.”
Doordash needs to turn things around. That means either they raise prices or cut costs.
Where are they going to raise prices? Customers are already at the breaking point with the delivery fees. Local restaurants are already fed up with the high commissions. And now that restrictions from the pandemic have let up, they can't rely on continued growth in new orders.
That leaves cutting costs. And guess what their biggest expense is?
Will Doordash cut base pay again?
I think you'll see minimum pay drop to $2 fairly soon.
Doordash isn't going to announce it this time. They'll just cut it. That seems to be their M.O. lately.
At the end of April, 2022, Doordash quietly stopped the weekly mileage rewards that they were offering to help drivers with higher gas prices. A couple of news outlets reported that they were doing this, and I had sources tell me Doordash wasn't very happy that it was reported that way.
In early summer of 2022, I noticed more delivery offers for minimum pay ($2.50 in my area) for longer distance deliveries. I started taking nothing but long distance trips and comparing pay to similar distanced food orders from earlier in the year.
Doordash had cut the base pay for longer deliveries by 20%. Once again, not saying a word about it.
In 2021 when they cut their minimum from $3 to $2.50, they made a big deal about how they'd pay more for longer trips. In less than a year, the minimum pay remained lower and the amount paid for longer deliveries was also lower.
Doordash isn't going to publicize the fact that they're cutting pay at a time when prices are out of control.
They'll just do it.
I don't think they'll drop below the $2 minimum. That would require actually changing their pay model that isn't really a pay model. The publicity won't be good for them.
But I'm pretty sure it'll go down. Obviously I could be wrong. It wouldn't be the first time. I hope that I am.
What should Dashers do when Doordash cuts the base pay?
Time for an unpopular opinion:
Doordash doesn't have to pay us more. They're completely free to pay as little as they want.
They don't owe you or I a thing. The only time they're obligated to give us anything at all is once we've completed a delivery. And then, the only thing they owe us is what we agreed to for that trip.
When you run a business, there's no such thing as fair compensation.
That may not be what you were expecting to read.
There's not really any true Doordash driver pay. Your business is paid an agreed upon amount for completing delivery orders.
All that's happening here is that your business is providing a service for a negotiated amount. I know it doesn't feel like a negotiation, but it's really pretty simple: Doordash says hey, I have this delivery. Do you want it?
Your negotiation is to say yes or no.
Every delivery offer on the Doordash driver app is a bid for your services. No more, no less.
The best response: treat this as a business.
The thing is, as an independent contractor you are providing services as a business. That gives you a lot of rights and a certain amount of control over how you do things.
If they're making you sign up as a business rather than hiring you as an employee, your best strategy is to actually treat it like a business.
- Set your price
- Make your own schedule
- Don't rely on only one customer
- Be your own boss
1. Set your price
I'm a huge advocate for setting your price by rejecting deliveries that pay too little for the time and expense that you have to put into them. I have to believe a delivery will meet a certain minimum hourly rate to accept it.
A lower delivery fee only means my acceptance rate is dropping. My base rate is 50 cents a minute, and lower base pay means fewer offers will meet that rate.
2. Set your own schedule
Take advantage of the freedom that goes with being an independent contractor. Be strategic about finding the best times to Doordash. Slower times often also mean fewer extra tips, so you may want to focus on peak delivery times.
3. Don't become overdependent on just one customer.
Here's the thing about providing services as a business. That means the one that's paying you is your customer. That, my friends, is Doordash. Even though a lot of your pay is from customer tips, Doordash is still the one facilitating it (and whether they admit it or not, using those tips to determine base pay).
That means Doordash is your customer, not your boss.
It also means they shouldn't be the only delivery platform you work with. It's a bad idea for any business to have only one customer. Too much can go wrong.
Doordash is bidding for your services on a delivery by delivery basis. Your ability to make more increases if other delivery apps (or other gig economy services) can bid for your services as well.
4. Bee your own boss.
Doordash is offering less pay per delivery. That's obvious.
It doesn't mean you have to take less pay per delivery.
You have the option to make your own decisions. You can set your price as we talked about. This also means you can work with several customers.
Doordash can not legally tell you what offers to take. Nor can they tell you what percentage of deliveries you can accept. They can offer incentives like Top Dasher status for a higher acceptance rate, but they can't punish or terminate you for not accepting deliveries.
The only way they can do that is if they made this a real job, as in hiring you as a W2 employee, paying benefits, minimum wage, insurance, all those things. They chose not to do that.
But that also means they chose to let you be your own boss.