How Much Should You Tip?

Last updated on: June 16, 2011 at 7:00 am by Tim

How Much Should You Tip? 2011-06-16T07:00:02-05:00 Tim

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There’s a weird thing about tipping that I’ve never really understood. Why do people tip at all? Yes, I still tip, but the way we tip doesn’t make sense. We tip after the service is done, almost as a reward. But one of the main economic principles behind a tip is leave an impression on the person serving you so that you have better service next time. The hourly wage is ‘reward’ for their work; the tip is extra. But it’s not like that, and unlikely to change. (Ok, I’ll stop ranting about the economic oddity that a tip is)

In all seriousness, have you ever wondered how much to tip? Is 10% to cheap? Is 20% the standard? Are $20,000 tips normal? Ask Mark Cuban, billionaire owner of the Dallas Mavericks who tipped a wait staff $20,000 this last week…WOW!

J.D. Roth at Get Rich Slowly posted an interesting article about tips a few years ago. He listed commonly accepted tipping practices that people generally used. From haircuts, to pizza delivery, to baggage handlers, there is usually a standard that people follow for giving a tip.

Here’s another question – do you tip differently when you’re not paying the bill? If you work for a company that is paying the bill, are you more generous and tip 20%? There’s something interesting about how we spend our own money versus how we spend other people’s money.

Personally, I try to tip between 10-20% depending on how good the service is. If it’s exceptional, I’ll simply take the total price of the ticket, move the decimal, multiply it by two and leave that as a tip. (i.e. $30.00 total = 3 x 2 = $6 tip). If service was poor because of the server, I’ll probably leave a 10% tip. I can’t remember ever leaving $0 because of terrible service, but I probably would if service was horrific (because of the server).

While it’s still an economic mystery why someone would leave a tip at a place they don’t expect to go back to, I think it is a generous act that we should try to practice as much as we can.

How much do you tip? Does it vary at different establishments?

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