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Should you always tip at bars or restaurants? How much?

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If you look up the etiquette for leaving a tip, pretty much the only thing you won't find is a consensus.

Everyone seems to have their own set of rules and rationale for each situation. Tipping is of course standard for table-service, but many people get upset if they get prompted to leave a tip in the digital payment terminal for counter-service.

We are warmer to the idea of a tip jar and on the occasion that someone impresses with their customer service behind a counter, we are happy to leave a tip. But the opportunity for that employee is somewhat limited as the interaction is very quick, so counter tipping doesn't happen often. Even worse is when you call in a take-out order and get the tip prompt on the terminal when you're simply picking up the food.

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Using the automatic tip that is added to the bill of larger groups as a guideline, the standard tip for table-service is 15 per cent. We have the flexibility to adjust that up or down but it's worth considering what the server is responsible for, and what is beyond their control. If the food is bad, that doesn't warrant a lower tip. Conversely, if the food is great, that doesn't warrant a larger tip. Presumably the menu prices will reflect the food quality, location, and ambiance of the restaurant. From a consumer's perspective, the tip should be based on the service.

Last week I had two separate cab drivers earn themselves no tip within minutes of getting into their cab. Both took personal calls and spoke quite loudly for the majority of the trip. How else do I justify leaving a tip for the great drivers who help with luggage, engage in polite conversation when appropriate, and don't drive like they're trapped in a pinball machine? If the tip is a reward that moulds behaviour, I certainly want to encourage what I like, and discourage what I don't.

That's our prerogative, right?

Apparently not, according to some. I've often heard the argument that tips are necessary for the recipient to earn a decent living: the hourly pay in many food retail jobs is low, so servers rely on tips to bolster their earnings. Servers may rely on tips, but that doesn't mean they should expect one. It just means that they have a greater incentive to provide good service. I'm happy to tip 20 per cent or more - when it's warranted. But I'm also not afraid to forego a tip for poor service.

The notion that tipping should be mandatory in order to make it financially worthwhile to be a server suggests the economics of that business are wrong. If the restaurant can't afford to raise the hourly wages and pass on the increase to customers, that restaurant isn't good enough.

Conversely, when tipping is mandatory, that's effectively the same thing as raising prices. But it precludes the great servers from making more money since their exceptional service wouldn't be rewarded as much. Even worse, it could be rewarded at the same level as poor service.

Give us your two cents on tipping. What's your philosophy? Do you have any rules of thumb? For example, some people tip a percentage on the food total before tax, and then a flat rate per bottle of wine when eating out. Others just tip 15 per cent on the total no matter what. Some never tip for delivery or counter service. Do you?

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Leave your tipping tips in the comments section below.

Preet Banerjee, a personal finance expert, is the host of Million Dollar Neighbourhood on The Oprah Winfrey Network. You can read his blog at WhereDoesAllMyMoneyGo.com and follow him on Twitter at @preetbanerjee.

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About the Author
Personal Finance columnist

Preet Banerjee is a consultant to the financial services industry. You can follow him on twitter at  @PreetBanerjee. You can find his conflict of interest disclosure on his website. More

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