Tips vs. Gratuities

While twisting up a storm at Dave & Busters in Westminster the other night I ended up in a conversation that reminded me that we often confuse tips with gratuities. It is a simple enough mistake, both involve giving a subjective amount of money for a performance. However the difference is all in the timing of the thing.

When a grandmother comes up to me and hands me $20, asking me to make something really crazy for her grandchild's birthday, she is giving me a tip. I have not yet done anything to earn her patronage. In fact, I could be the WORST balloon guy in the world, and she's already put money in my hand, in the hopes that it will motivate me to do something spectacular. Tips are a motivational monetary gift.

When I do a balloon for a family and the grinning, giggling girl it hugging and happy with her balloon, the $5 that the parents give me is a gratuity. They are grateful for how I have made their daughter so happy and wish to give me something in thanks for the effort. In both of these cases, it is not a payment.

Personally, I am not a fan of tips. It is a blind assumption of skill and performance that I find rarely fits with reality. If you give me $100 to make balloons for your table, and then only 3 people want balloons, and what they want is teddy bears and flowers, there is little I can do to expand that offering. It is equally challenging when a parent pulls out $1 to give me before knowing what it is I am going to make and hands it to the child before turning away and ignoring the performance. Often that child wants a pirate ship, a mermaid, or perhaps a pod racer.

When calculating a proper gratuity for a server, I look to the effort and energy put into the work done during the meal. When giving a gratuity following a haircut, I look to see if my expectations are in line with the results, how much art was put into the efforts. When I tip my barista, it is a motivation to make a beautiful chocolate chai with maybe a little extra sweetness.

When giving a tip or a gratuity what do you consider?

Crisis of Credit

Here's a 101 on the credit crisis!




and the final part:

Relative Income (or Give Yourself a Raise - part 2)

OK, so you make $40-80K per year and your work 50 hour weeks. You own your business and spend your evenings answering e-mails, and all day planning meetings, going to meetings, and networking to get more clients. Your weekends are often scattered with you meeting with clients and answering e-mail on your PDA when your partner isn't watching.

Want to make more money? Spend less time. If you value your time for yourself as greatly as you charge your clients for it, (Which you should.) then you are wasting your own money by taking your time for granted.

Let's say you are a massage therapist who charges $60+ an hour for your services and you spend 5 hours this month trying to get your books in order... (5 x $60 = $300) How much money would it have cost you for a local bookkeeper to do it for you in half the time? Perhaps $80 per month? So by spending $80 on a bookkeeper for the month, you save $220 this month. And you now have 5 more hours to spend with clients, go on a date, or something else that brings you pleasure instead of causing you headaches.

Your time is so very valuable, and if you trade it simply for income, or even worse perceived income, then you are cutting your real wealth right out from underneath you.