Personal Finance 

Why Tipping Is The Best Investment Ever

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Tip JarI’ve always found that tipping, by far, is the best investment you can ever make in almost any situation. Anyone who has ever bellied up to a bar knows that a dollar a drink is all it takes to get the speediest of service on even the busiest of nights. Want a nicer hotel room? I’ll tell you about a risk-free technique you can use to score complimentary upgrades, if they’re available.

I’m not an master of etiquiette nor do I have extensive experience with the benefits of tipping, but I think the insights I am about to share can change, or reinforce, your thoughts on going above and beyond, financially.

Tipping Creates A Relationship

When you tip someone, you create a relationship with that service provider that puts you ahead of anyone else who hasn’t tipped. Whether it’s just a dollar at the bar, a few bucks for the attendant who brought your bags to the room, or a little bit more than 10-15% on the restaurant bill – a tip puts you ahead.

I used to work as a banquet waiter and I would routinely work parties with a complimentary bar. Guests could go to the bar to grab a drink themselves or their table’s waiter or waitress could get it on their behalf. That particular night (4-5 hour party), I earned about $80 in tips… the majority of which came from four people. They weren’t the heaviest drinkers, they were simply the most generous. One guest gave me a $20 tip to start the night and while he never tipped again, which I expected, I made sure to stop by his table every time I walked by. Another guest would ask for several drinks for his table, then tip me $5 each time. To this day I still remember one guest asking for five shots of Sambuca and then giving me $10 for the trouble. In each case, I always made sure to go back to them and make sure they were taken care of.

On the flip side, we routinely go to a local Pho restaurant that is incredibly affordable and remarkably quick. It’s so affordable, we always tip 20% or more simply because the bill is so low ($15 for dinner for two is about average). It’s to the point where many of the wait staff already know what we like to order, are extremely fast with service, and we can easily have lunch there in under half an hour (yes, while enjoying our food!).

Relationships Are Rewarded

When you create that relationship, you are separated from the pack in the person’s mind. You’re not a friend, but you’re not a stranger either. So when it comes to pick who to help out next, you always go to the person you’re more familiar with.

If someone is feeling especially charitable one day, they’re more likely to reward you for rewarding them. I do a fair bit of flying on Southwest and take advantage of their drink coupons, which they send along with their frequent flyer vouchers. Whenever I get a drink, I’ll hand over the voucher and a dollar as a tip. One time, the flight attendant, near the end of the flight, dropped off about twenty coupons as a thank you (my wife was there, she can confirm this). The flight itself was five hours, we had at most three drinks a piece, so we got twenty drink vouchers for $6. Can’t think of a better return on investment. 🙂

Bribery Isn’t A Bad Word

Finally, let’s not ignore the fact that what’s really happening is that you’re bribing someone to give you favorable treatment. Everyone who leaves a tip knows that it is both a reward and a teaser for the next time. Custom dictates 10-15% on a bill, but you leave 20% for great service from someone you like or someone you know. You do that because you know you’ll be back and that 20% is an investment on your next visit. You’ll get great service the next time you visit because you’ve rewarded great service in the past. I know that even at the end of the party, when I was exhausted and didn’t want to carry over a round of beers, I’d do it because a guest was particularly nice and generous to me (both are important!).

That’s why “palming” a twenty to a gatekeeper can be so valuable. If you want a nicer hotel room, give the twenty dollar trick a try. The twenty dollar trick is used in a hotel where you put a $20 bill, folded inconspicuously underneath your confirmation credit card, as you slide it over to the front desk clerk. While you do this, ask if they have any complimentary upgrades available. Usually, not always, your $20 is returned if there are no upgrades available. On some occasions, they will keep the $20 even if there are no upgrades. Tipping doesn’t always result in a win, but more often than not it does.

If you think $20 for a room upgrade seems cheap, check out this Esquire article by Tom Chiarella: The $20 Theory of the Universe. Tom goes traveling and, armed with a few twenties, finds out what he can get for it. He gets car detailing on the cheap, an upgraded seat (by paying another customer, not from the airline), and a few other more unbelievable twenty-dollar buys. It’s a pretty entertaining read (along with 75 Skills Every Man Should Master, which I think is an even better article by Chiarella).

Hopefully I’ve either convinced you or reinforced the idea that tipping is a very good thing and how a little can go a long way. What I’d like to learn from you is whether you have any tipping secrets or techniques that have worked well for you?

(Photo: burningkarma)

{ 28 comments, please add your thoughts now! }

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28 Responses to “Why Tipping Is The Best Investment Ever”

  1. betsy says:

    Thanks for the ‘TIPS’! I just needed to rent a car…I slipped a $20 to the attendant and received a free upgrade to a mustang convertible. Yes, I know it is somewhat commonplace for car rental outfits to offer the upgrade, but in this case the people were very helpful and congenial even though the office was swamped and I felt the gesture would be a welcome one.

  2. Different take here–I find that treating people with dignity and respect gets many of the same advantages. People who wait tables or stand behind counters don’t get treated all that well by a lot of patrons. Respecting them as human beings up front can win as much favor as slipping them some money.

    The tip usually comes at the end of service anyway, so the primary advantage is if you’re a repeat customer. In that case, it pays richly to tip.

    • daemondust says:

      This. A little ‘please & thank you’ goes a long way with someone who’s overworked and under-appreciated.

  3. DJ says:

    I have several friends who are servers at restaurants. One thing to keep in mind that tips are their primary source of income. Their regular wages well below minimum wage as low as $3-4 per hour. They depend on them just to get by.

    • saladdin says:

      That’s not my fault as a customer. You are getting into dangerous waters implying that a tip is required. Remember what a tip is for. Reward. It’s not my responsibility to subsidize a businesses payroll. There is no reason a tip should ever be required or expected.


      • DJ says:

        I certainly never said it was required, merely something to keep in mind. Personally, I have no problem rewarding the people who offer friendly service.

      • PizzaGirl says:

        Actually, that is a reason you should tip. I think we all agree that restaurants should raise their prices and pay servers a living wage. However, that’s a matter for congress. Can you really expect corporations to not take advantage of a law that allows them to get away with this? With that said, tipping is you paying the server directly for their service instead of paying their employer for their service. You’re going to pay for it one way or another. If you do not tip them, you steal their time. Just because you can steal their time and effort doesn’t mean you should.

      • Augiebball says:

        Scrooge! The only people who ever say this are the people who have never waited tables. I think a tip is always expected. But, unless the service is poor or you are wronged in some other way as a direct result of the server, a tip is mandatory. The “reward” component is whatever you add above 10-15%.

  4. Tipping the barkeep at wedding receptions and such is also a good way to make friends. Be sure to slip a dollar into the tip jar the first few times you visit, and be seen doing it.

    If you like mixed drinks, tipping will get you a better drink — better liquor than the ‘house brand’ — than if you don’t.

  5. aa says:

    Just because the restaurant owners get all the profits, it doesn’t mean the customers have to cover their employees with tips.

  6. Jeff says:

    Very well put.

    I deliver pizzas on the side and almost all of the money I make are from tips. I can tell you who the good tippers are, the bad ones, and the no tippers. For the good ones, they always get their pizza the fastest and I usually can slip in a little extra treat for them. I have been giving a little extra for some time now and they always notice the perk.
    I don’t really slow down delivering for the bad tippers, I just try to be even more friendly to try and draw out some love.
    The no tippers get normal service and sometimes even a smile. They are usually the most rude people so I never feel bad.

    • daemondust says:

      That works if you always have the same delivery person. Either I’m a terrible tipper (15-20% depending on the weather), or there is a ton of turnover in delivery here.

      • Jeff says:

        I’m the only driver from 8p-1a on Friday, Saturday, and Sunday nights. So I get the same people quite often. Even when I order at home from other places I get alot of the same drivers.

        If we’ve only been to your house once, we remember you. If you come in our stores once or twice we remember you.

        15-20% is great, keep up the great tipping.

        • daemondust says:

          I don’t order delivery very often, but I think I’ve only had the same deliverer twice in the last six months.

  7. Waiting says:

    I know it isn’t necessary but I always tip Starbucks employees. My friend worked there a long time ago and said that they definitely remember people who tip. I usually give them $1 and whatever the change is. Well worth the investment since once a month or so one of their employees hands me 5 coupons for free coffee.

    aa: Tipping is a social custom implemented in restaurants to make sure you get good service. Sure, the owners could just pay what you think is a fair wage and add the amount into the cost of your food instead but what incentive would servers then have to go above and beyond the call of duty for you? You would wind up with mediocre service at best. Also, your $15 meal would become $18 and then you would just complain that it is too expensive.

    If you don’t want to tip and don’t understand the tipping system – stay home and cook your own food or eat at a fast food restaurant, where tipping is not expected. The truth is, if you don’t tip not only are you screwing the server by doing so but you are also taking up space where someone who is smart enough to understand the tipping system and appreciate the hard work of their server could be sitting.

    FYI: I wait tables in a union so I make more than $11 an hour – my check is still only $50 or so a week after claiming tips. The money deducted goes to taxes (not a 401K) and those taxes benefit everyone – including you.

    • Jim says:

      I personally don’t like the whole system of tipping but I agree with you, Waiting, the system is what it is. If you want to be a part of it, you have to play ball, it’s as simple as that. I think servers and bussers should be paid a fair wage, independent of tips.

      If you get bad service, then you’re less likely to return. The incentive for servers to perform well, and for owners to reward good servers, is for repeat business. If business goes down, servers are laid off, and while the compensation isn’t directly, I’m pretty sure servers understand this.

    • MLR says:

      The fact that you pay taxes isn’t unique. Are you insinuating that aa doesn’t pay taxes? For all you know he is paying more in taxes than you which would mean net benefit = you, not him. If I was paid 20% of my pay via check and the other 80% via tip, my check would also be minuscule. I don’t get your point in your FYI.

      Having been a waiter before, and having been friends with and dated other waitresses before, I do not feel bad pegging my tip to their service levels.

      If they give me absolutely horrible service, I will make sure to just tip enough to cover tip out to the cooks and bussers. 20% isn’t an “expectation” in my book and they shouldn’t behave as if it is.

      One of my friends worked at Applebees — a cheap chain restaurant — and made, on average, $17/hr. He did give good service, though. So if someone doesn’t want to work for their money and winds up averaging $10/hr.. oh well. They could always work as a UPS package handler for $9/hr if that would make them happier. Harder work, less pay.

  8. It feels good to tip people who work hard and deserve it. Especially street performers, musicians, etc. Amd all service personnel.

    John DeFlumeri Jr

  9. zapeta says:

    I agree that tipping can be a good investment if you’re someone who frequently goes to the bar/restaurant. My friends and I were regulars at a couple establishments in college and so the employees knew us well and that we tipped and we got a lot of free stuff over the years. If you are at a place that you don’t go to very often tipping isn’t a good investment, but still very necessary to recognize good service.

  10. lostAnnfound says:

    I tip our Sunday paper carrier a buck a week, pay on time (so he doesn’t have to come back to us), and at the holidays he usually gets $25 & probably something like a DD gift card. My paper is ALWAYS right on the front steps as soon as you open the door & I don’t even have to step outside to get it. Considering the cost of the paper is only $1.50, he’s getting (percentage wise) a pretty good tip. I appreciate where he places the paper & the fact that he is always early with the paper. Well worth a few extra dollars out of my pocket for such a nice treat on Sunday morning.

    Also, as a paper carrier in my teens I still remember a particular customers who tipped $20 dollars put into a beautiful gold foiled holiday card and who would have a warm cup of apple cider or hot chocolate for me as they gave me the card. And I’ll admit that was over 30 years ago and I still remember them!

  11. Anonymous says:

    I agree, although I’m not made of money, a dollar can make an experience more memorable for the server and me.

  12. hoht says:

    I agree, although college students are the poorest of bunch, a few dollars can make an experience that more memorable.

  13. The relationship is there only until the waiter finds a new job!

    Frankly, I think EDUCATION is the best investment ever, but that’s just me. 🙂

  14. I enjoyed this article and am about to read the Esquire article you linked out to right now.

  15. saladdin says:

    Police in Bethelehm, Pennsylvania, are withdrawing charges against the two college students who refused to tip at a pub last month, says The Morning Call.

    Police Drop Theft Charges Against Pub Non-Tippers

    • daemondust says:

      I love how everyone always seems to think dropping the charges negates the original arrest. Wouldn’t it be nice if police actually had a working knowledge of the law?

      (I’m not saying all, or even the majority, of police officers are like this, but the frequency of things like this shows a complacency, if not outright approval, of abuse of power.)

  16. Izalot says:

    I tip because it’s a social norm…but I hate it. If it was forbidden then economics would sort out the salary for the service industry. To allow tipping encourages the exploitation in the service industry. A local supermarket recently forbade the baggers from accepting tips and I’ve returned to shopping there, even though I have a Wal-mart nearby. By the way who came up with the 15% amount for tipping anyways?

  17. aua868s says:

    A wonderful post to look at tipping in a very different perspective!

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