What tip is considered appropriate?

No one wants to be called stingy. Once upon a time in Germany, a simple “keep the change” or “these are for you” was enough for a customer and a waiter to come to an agreement.

Most of the time customers would tip by rounding the amount down a bit. But today, in the age of digital payments, things are changing and getting more complicated. While in the past tipping was common only in restaurants or in the provision of services, such as hairdressers, manicures or taxis, today customers are asked to give something more even where tips are not given.

In an upscale patisserie on Berlin’s Kurfürstendamm, for example, the options on the POS screen are 7%, 10% and 20%. It is only at a second glance that one realizes that other fields are available on the touch screen, such as, “Enter amount” or even “No tip”. A little further down, in the neat burger restaurant the POS “communicates” with the customers only in English. 0%, 10%, 15%, 20%, and 25% are possible tips. 25%?

Have we gone completely crazy? €2.38 for a €9.50 double cheeseburger?

Are default tips acceptable at the POS?

In the US many restaurants pay workers less than minimum wage, assuming that tips will easily cover the difference. American researchers attribute the current trend in America for higher tips to, among other things, the pandemic period. According to a study, consumers were more generous at the beginning of the pandemic and supported distributors knowing that they are affected by the restrictive measures and lockdowns. But even after the end of the pandemic, higher tips seem like they are here to stay.

“It is increasingly conveyed to customers now, not only that the store expects a tip, but also the amount it deems appropriatesays economist Christian Traxler. But if tips are only shown as defaults too high at the POS, some people might give more money, but at the same time the number of people who don’t give anything will increase.

Less attractive focus without tips

““Studies show that customers tip less when they pay by card,” says economist Sasha Hoffman, pointing to the negative impact on the incomes of workers in the restaurant sector and other service occupations. Hourly wages are not particularly high in these fields anyway, and workers depend on tips as an additional source of income. According to the German economist, if tipping is abolished, catering and similar sectors will become even less attractive, which could worsen service labor shortages: “But at the same time there is a risk that customers will feel pressured to tip , which they would not give in other circumstances. In other words, they may initially view 5% or 10% as a welcome help, but later feel that they tipped too much».

If, for example, there are options available for 5, 10 and 15% of the final price, the “tendency towards the middle”, known from psychology, may lead customers to give too much.

But there is also the “Decoy Effect”, which works like this: If certain default tip rates are too high, then suddenly lower rates seem more acceptable. But again the client may give more than if he had decided freely.

Chances are, though, that most problems with tipping arise because we don’t talk about them openly, probably because we’re afraid of being seen as stingy.

Editor: Stefanos Georgakopoulos