How It Works: Cabbies can never raise their prices: The city sets their meter rates at 40 cents for either four blocks or one minute standing, plus a starting amount ($2.50 or more depending on time of day). Their hours are most profitable when driving long distances with no traffic. “I want to be making $30 to $40 an hour,” says Pekoh, a Ghanaian immigrant who owns his own medallion and drives 60-hour weeks. Pekoh aggressively hustles to pull in $300 to $400 a day after expenses.
Sixty to seventy percent of yellow cabs are leased from fleet operators for $120 per twelve hours, with cabbies pocketing all revenue beyond gas costs. Most drive twelve-hour shifts and report $150 to $300 per shift. After twelve years of leasing, Pekoh bought a medallion for $190,000 in 2000. As an owner, he’s responsible for buying and maintaining his car.
Annual Revenue: $75,000 ($12,000 is profit before tax).
Annual Overhead Costs: Gasoline: $18,000; basic-model Crown Victoria: about $7,000 (the $28,000 car is replaced every three to five years); insurance: $5,000; car maintenance: $4,000 to $5,000; parking: $2,200; medallion debt payments: $24,000 (he expects to sell his medallion at a profit; one went for $600,000 last week).
Most-Profitable Fares: Low-traffic city trips: “Every time somebody gets out, someone gets in, and I get my $2.50.” Midday airport runs: “At 3 p.m., there’s no traffic, and so many planes are coming in that you get $90 plus tips.”
Least-Profitable Fares: Borough trips in traffic: “It’s a dead ride back to the city, and getting through a bridge or tunnel in rush hour can be tough,” says driver Cliff Adler.
Profit Catastrophes: Tickets: $65 to $115 per moving violation.
Added Value: Hacks are pulling for congestion pricing: Heavy traffic in midtown is making it an unprofitable (as low as $20 per hour) standstill.
New Yorkonomics: Taxis become economically attractive when the cost of paying someone to drive for you is less than the costs of storing your car. New York’s high price of land makes parking so expensive that there’s enough demand for an army of Samuel Pekohs.