Taxi Driver Commission: Which Models Taxi Companies Use and How to Choose Yours
Taxi driver commission is what a taxi company charges a driver for access to orders, a car and the company's infrastructure. Three models are used most often: a percentage or flat amount per order, a shift fee, and recurring payments (daily, weekly, monthly). The right commission depends on what you give the driver, how busy they are and what your costs are. Below you'll find a comparison of the models, an illustrative calculation and a step-by-step plan for choosing.
Taxi driver commission: three basic models
| Model | How it works | Best for | Risk for the company |
|---|---|---|---|
| Per order | A percentage and/or flat amount from each completed order | Newcomers, part-timers, drivers with unstable utilization | Income falls along with orders |
| Per shift | A flat amount for going online, sometimes depending on the number of orders | Busy drivers with high utilization | The driver only goes online if they're confident of getting orders |
| Recurring payments | A daily, weekly or monthly payment independent of any specific shift | Drivers in company cars, the core team | The payment can exceed earnings in a bad week |
In practice the models are often combined: a small percentage per order plus a weekly payment, or a shift fee plus a percentage on expensive orders.
Model 1. Commission on each order
The scheme drivers understand best: the company earns only when the driver earns.
Options:
- Pure percentage. For example, 10% of each order's price.
- Flat amount. For example, 8 units per order regardless of price. Handy if the average fare is stable.
- Percentage plus flat fee. A small fixed part covers the cost of handling the order, and the percentage covers the rest.
- Tiered commission by price. One rate for cheap orders, another for expensive ones. This way you don't put drivers off short trips.
- Different commission by order type. For example, lower for orders from corporate clients or higher for intercity trips.
Pros: a low entry barrier for the driver, a fair link to utilization. Cons: the company's income is unstable, and the driver may "go off the books" by taking passengers without going through the company.
Street pickups can partly solve that last problem: the driver app has an "Own passengers" mode in which a trip with a street-hail passenger is recorded as a company order and is subject to the normal commission. If the commission on such orders is low, it pays for the driver to record them: they get the taximeter and a record of the trip.
Model 2. Shift fee
The driver pays a flat amount for each shift. Everything they earn above that stays with them.
How to make the shift fee flexible:
- charge only if the driver completed at least N orders, so an empty shift costs nothing;
- set different amounts by number of orders: less for up to 5 orders, more for 5 to 15;
- sell the shift in advance: the driver "buys" favorable terms for a set number of hours or orders.
Pros: predictable income for the company, motivation for the driver to work more. Cons: bad value for newcomers and part-timers; drivers don't go online during dead hours.
Model 3. Recurring payments
A regular payment: daily, weekly or monthly. It's charged on a set day and time, regardless of the number of shifts.
Where it fits:
- renting a company car;
- a subscription fee for connecting to the company;
- a fee for branding, advertising on the car or a parking spot.
A recurring payment can also be conditional: for example, charge the weekly amount only if the driver completed a certain number of orders, or calculate it from the number or value of orders in the period. For a company with its own cars, this kind of conditional weekly payment is often the rental fee itself.
How much commission should a taxi company take: how to calculate it
Don't copy your competitors' figures; they have different costs. Work from your own economics.
Step 1. Calculate the company's monthly costs per active driver. Dispatchers, software, telephony, advertising, office, driver recruitment: divide everything by the number of drivers who actually go online.
Step 2. Add your target profit per driver.
Step 3. Estimate utilization: how many orders an average driver completes per month and the average fare.
Step 4. Convert the required amount into your chosen model.
Illustrative example
The figures are illustrative, in generic units, and are given only to demonstrate the method.
- The company's costs per active driver: 3,000 units per month.
- Target profit: 1,000 units per driver per month.
- Total the company needs from each driver: 4,000 units per month.
- Average driver: 350 orders per month, average fare 100 units, total revenue 35,000 units.
| Model | Calculation | Result |
|---|---|---|
| Percentage per order | 4,000 / 35,000 | about 11.5% |
| Flat fee per order | 4,000 / 350 | about 11.5 units per order |
| Shift fee (25 shifts) | 4,000 / 25 | 160 units per shift |
| Weekly payment | 4,000 / 4 | 1,000 units per week |
| Combination | 5% per order (1,750) + weekly payment | about 560 units per week |
Now check what this means for drivers with different utilization. A driver completing 200 orders a month would pay about 2,300 units with the percentage model, but the same 4,000 units with the weekly payment. For them the weekly model is a heavy burden. A driver with 500 orders would pay about 5,750 units with the percentage but 4,000 units with the shift fee. The shift fee suits them better.
The practical takeaway: a single commission for everyone almost always works against someone. It's better to have two or three plans and let drivers choose.
How to choose a commission model: step-by-step plan
- Segment drivers by utilization: newcomers, part-timers, the core team, drivers in company cars.
- Choose a model for each segment: a percentage for newcomers, a shift fee or combination for the core team, a recurring payment for renters.
- Calculate each plan with illustrative and then with real utilization.
- Check the edge cases: what happens to a driver in a bad week and to the company in the off-season.
- Decide who pays for passenger discounts. If the driver pays for promotions, their effective commission is higher than the contract says.
- Set a minimum balance: the threshold below which a driver gets no orders until they top up.
- Put the terms in writing and show the driver a sample calculation.
- Review the plans quarterly using reports: how much each segment actually pays.
Commission transparency: why it matters more than the rate
Drivers leave not so much because of a high commission as because of charges they don't understand. If a driver can't check for themselves what they were charged for, they start to suspect they're being cheated.
What helps:
- transaction history in the driver app: date, amount, remaining balance and a comment on what the charge was for;
- clear rule names: "10% commission", "Shift from 5 orders", not "Rule 3";
- regular reconciliation: a weekly financial transaction report;
- the same rules for all drivers on the same plan.
The payout procedure is also part of the terms: the driver should know in advance when and how they can withdraw what they've earned from their balance.
How to set up commission in taxi company software
In Tonotel commission is set up through driver work terms. One set of work terms is one driver plan, and it has six tabs:
- "General": the name and direction, charge or credit;
- "Per order": any number of rules of the form "for orders priced from X to Y, of these types, in these vehicles, take this amount and/or percentage";
- "Per shift": a flat amount, unconditional or depending on the number of orders in the shift;
- "Daily", "Weekly", "Monthly payments": regular charges on a set day and time, unconditional, by price or by number of orders.
Each driver is assigned one set of work terms. To create a similar plan quickly, you can copy the whole set with all its rules and change only the rates. If you want drivers to choose a plan for the shift themselves, you can sell it through the store in the driver app: the driver buys work terms for a set number of hours or orders, and the company can prevent a shift from opening without such a purchase.
All charges automatically go into the cash desk and the driver's payment history, and the "Driver financial transactions" report shows which rule of which work terms was applied. If a minimum balance is set in the driver's profile and an auto-blocking reason is configured, a driver in debt automatically stops receiving orders until they top up.
Frequently asked questions
What is a typical taxi driver commission?
There's no single standard: companies take a percentage per order, a flat per-shift fee, a recurring payment or a combination. The size of the commission depends on what the company gives the driver: orders, a car, insurance, support. The sound approach is to calculate it from your own costs and target profit rather than copy other companies' figures.
Which is better for a driver: a percentage or a flat shift fee?
A percentage is better for a driver with low or unstable utilization: no orders, no payment. A flat shift fee is better for a busy driver who completes a lot of orders: after a certain number of trips, all further earnings stay with them.
Can different drivers have different commission rates?
Yes. Companies usually create several driver plans, for example "percentage", "shift" and "rental", and assign each driver one of them. In taxi company software this is done with different work terms.
How much commission should a taxi company take per order if the driver uses their own car?
When the driver uses their own car, the company has no vehicle costs, so the commission is usually lower than with rental. The exact figure is calculated as the company's costs per active driver plus the target profit, divided by the driver's expected number of orders per month.
How do I raise the commission without losing drivers?
Warn drivers in advance, explain what they get in return, offer an alternative plan (for example, a shift fee instead of a percentage) and show the calculation based on real utilization. A transparent charge history in the driver app reduces mistrust.
Summary
The right taxi driver commission isn't the lowest or the highest; it's the one that covers the company's costs, leaves a profit and works for the driver at their real utilization. Start by calculating from your own costs, create two or three plans for different driver segments and make every charge transparent. Tonotel lets you run several such plans at once and see in reports how much each segment actually pays.