To Tip or Not to Tip: That is the Question

As I am fully immersed in my Jersey Shore Summer life, I find myself constantly doing take-out and other services.  As a plus, I feel like a good dad doing all sorts of activities with my kids.  On the minus, my waist and wallet aren’t thanking me.  As I go from activity to activity and takeout window to takeout window, I like everyone else struggles with the old tip game.  Who do I tip?  How much?  Why?

Now I recognize there are certain easy norms.  Have a good meal and service at a restaurant – start with 20%.  But after that, I believe the tipping world becomes very muddy.  So without making this my grand opus, I figured let’s try to give some basic guidelines as to when to tip and when not to.

Service Service Service

Alright, let’s start by separating – there are two types of business in the world.  We have a service business and a goods business.  Generally speaking, when thinking about tipping, focus on the service business.  Sorry, all you manufacturers, but tipping is a service business conversation.

No Tipping for Advanced Degree Professionals

Now, once we understand tipping is for the service industry, we have to split this baby in half.  I look at the service industry under two umbrellas.  First, we have advanced degree professionals.  Think doctors, lawyers, engineers, professionals, and sadly yes us financial planners ☹!  These service professionals don’t require a tip.  Mostly due to the fact you pay them directly for their service.  Or, their bosses are paying them directly for their service, which is an important distinction.

Tipping for Service, Wage-Based Professionals

Second, the set of service professionals are not the advanced degree needed jobs (disclaimer as I am not suggesting that people working in these fields don’t have advanced degrees).  Think your delivery driver, waiter, valet, bellhop, hairstylist, etc.  The key distinction here is their livelihoods rely on them doing a good service to warrant a generous tip.  These individuals are willing to put themselves out there in a way that is scary to a lot of us.  Imagine if every day your boss came in and paid you based on your level of service?  Would be very daunting right?  Think if you are having a bad day and don’t feel like giving your all, the next thing you know – less pay!  Would stink, right?

Now, although I gave the two general levels of service professionals there is a third that slipped through the cracks.  You have your plumbers and landscapers etc.  These people don’t necessarily have an “advanced degree” however tipping isn’t customary for them.  The key difference here is they are paid directly by the consumer, or a decent competitive rate for the job you are hiring them to do.  This doesn’t mean it is taboo to ever tip these professionals, however, it is usually built into their price.

Food For Thought on Tipping

I like to generally think about who to tip from the perspective of the service provider themselves.  Are they compensated fairly for their job without my tip?  Do their livelihoods rely on tips?  If they didn’t get any tips, would they keep doing their jobs?  Am I already paying them for the job they are doing?  Would it be weird to tip this person?  Would I be a jerk if I didn’t tip this person?  These questions I ask myself when presented with a new tipping situation.

How Much to Tip?

Ahhh, maybe the hardest question of them all.  How much to actually tip?  I think there are a few places to start here.  First of all, was the service great, good, fine, or terrible?  If any of the first 3 just tip and be done with it.  I like using the 20% rule as my standard.  If I think the service was fine or good I almost always give 20% or whatever I think is the high side of normal.  If the service is terrible that is a tricky one.  Was it their fault or not?  Who is to blame for it being terrible?  I’d say, if not totally their fault than give something less than your norm.  If their fault, consider not tipping – but use this as a very, very last resort.  Now, what if the service is excellent?  In these circumstances give something more than the standard.  There is no rule of thumb I go by except, give an amount that you and they both know is rewarding them for excellent service.  It will make you feel good and them.

Tipping for Quick Restaurant Services

Now for other non-restaurant services I like to determine how much work they did, what level of job it is, quality of service, and again, reliance on my tip.  For instance, there is a local place here at the shore that I go to all the time for smoothies and wraps.  It is younger kids working a summer job.  Sometimes, I go in and click a screen, pay on the screen, and they hand me a premade wrap from the fridge.  At the risk of being hated, I don’t tip then.  Conversely, when I go into that same place, have the same college kids make me an $8 smoothie, I give $2.  The key distinction is one they handed me a wrap and the other I asked them to provide an actual service for me. 

The other thing to consider is are you tipping a straight percentage or a hard dollar amount.  For instance, delivery food is a rather tricky thing.  If I order 2 pizzas for $20 for 20 pizzas for $200 it doesn’t feel like it always has to be a percentage base, quite frankly on either end.  In this situation, I’d likely give $5 for the 2 pizzas and $20 for the 20 pizzas.  Again, I go with the gut feel and tip what seems to be a fair and appreciated amount, based on the services rendered.

Few Other Rules of Thumb

I think there are a few other general rules of thumb I like to abide by:

1. When in doubt ask– If you aren’t sure if you should tip or how much – ask their boss.  I’ve done this when I hire a driver or something like that.  I’ll ask the head guy or gal what is a typical tip. Then I use that amount as my baseline.
2. Frequency matters– You may not tip your cleaning lady every single time she cleans your house.  But an end-of-year tip or bonus (usually in the amount of an extra cleaning) is always appreciated.  Also, a one-time service vs. a long-term relationship certainly should be factored in.
3. When in doubt tip– I’ve barely scratched the surface today on all the areas one could tip on.  You may not always have the luxury of knowing the answer ahead of time.  If not keep an extra $20 in your pocket and throw it their way, you’ll never be disappointed.
4. Be generous– This holds especially true these days.  I have close friends who own restaurants and can’t keep good help.  People are struggling all over the place.  I find that if you can afford it, err on the side of being over-generous.  Generally speaking, a few extra dollars won’t change your life but can go a long way in making someone else’s.

 Hot Tip

Well, that wasn’t easy! However, if you struggle with this as much as most people I talk to do, hopefully, you found it somewhat helpful.  It is a tricky topic and there’s no wrong answer.  Just know your tips are always appreciated and very much needed now more than ever.

As always stay wealthy, healthy, and happy!