The Weight of Money

As a frequent diner, properly tipping servers is very important. I use the standard tip of 20% for the meal. However, I’ve realized that I may be inaccurately calculating the tip on the total bill instead of excluding tax. Depending on where you live, this could mean a big difference.

Lets take a simple lunch for two as an example:

$26.00 - total food/drinks
$1.30 - 5% MD tax
—–
$27.30 total bill

If you pay 20% on the total, you’ll tip $5.46.
If you pay 20% on the order, you’ll tip $5.20.

With a difference of $0.26, you may wonder what the differences is. However, you are actually tipping 21% when include the 5% sales tax. If you spend $4,500 annually dining out, you will spend $45 more a year. If your local tax rate is higher, or you travel to areas with higher rates, this could add up even faster.

Now, there is the argument that servers are often under payed and a generous tip is not a bad thing. However, because I tip a standard 20% unless the service is horrendous — it has to be really bad — I feel that it balances out for me to keep a 20% tip. That also doesn’t include lunches where I dine alone and the bill is less than $10.00. Often times, in these situations, I’ll tip a standard $3.00 -$4.00 depending on the service. Here, I’ve obviously passed the 20% mark but I feel that leave a tip less than $3 is a bit sad — maybe I just need to get over that.

Also, Mapgirl wrote a good post on why you should leave cash tips or tip higher with credit cards - but I can’t find it at the moment, maybe she’ll chime in with it.

This entry was posted on Wednesday, July 19th, 2006 at 10:19 am and is filed under general. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.