I manage a limo company, which is a service where tipping is customary. The average tip amongst all of our drivers and affiliates is between 20-25%, however there are some customers who don’t tip at all or tip so little it would almost be better if they didn’t tip at all so we could believe they just didn’t consider it. And it gets to the point where drivers don’t want to accommodate certain clients, because a decent tip is sometimes upwards of 1/3 of the driver’s net income, and nobody can be expected to enjoying working for 2/3 of their average net.
We have some competitors who will always say “gratuity not included” in their quotes. And we have some competitors who automatically add gratuity to their quotes and call it an “all inclusive” price. We’ve never done either of these things, as we think it’s a bit cringe/taboo to mention tipping before providing a service or when giving a quote, and if we went with an all inclusive quoting process, we might actually be pricing ourselves too far above our direct competition in our marketing space.
To try and give some examples of the complexity of the situation. We have groups of customers, where one family referred their friends to us, then their friends, and so on. So we’re in a position where we have to maintain the same price point for the service for all parties, because they’re all friends and could easily find out that the non-tippers are being charged differently if we were to just increase their fares to compensate the lack of tips. Another example is when one spouse tips more than the other spouse, for example sometimes the husband has cash and will pay the exact fare with zero tip, but when he doesn’t have cash we invoice them via email that the wife handles and always tips. These aren’t really situations where we can “cherry pick” when to accommodate these clients either. I’ve also had clients who tip me, but not the owner (who also drives) and said “don’t tell ______” when they tipped me. And sometimes a driver will get a $5-10 tip on a $400+ service, which just feels
disrespectful.
Here’s what we’ve tried so far; sending email receipts that will specifically show that no gratuity was added, but there’s no way to know that they’ve even reviewed the receipts. Or we’ll claim to be unavailable, and set the ride up with an affiliate, and explain that the affiliate’s price is “$X and gratuity isn’t included” as if that’s how our affiliate wanted us to present the quote. Some will tip, some won’t, and I’m really not sure if either of these tactics has changed anyone’s tipping behavior with us the next time they hired us.
Our drivers are all independent contractors who set their own pricing, the only thing our company collects is a $7 or $7/hr booking fee. This isn’t a complaint about pay, it’s more about retaining a customer by getting them to tip so that drivers are more inclined to except their future trip requests. It’s probably 5% of customers who don’t tip. We do sometimes just increase that customers next quote to make up for it, however when that customer is part of a group of customers who are friends, we’re concerned that word might get out that one of them is being charged differently. We’d rather not rock that boat, but this can be explained through the use of affiliates that set their own pricing.
Here’s a breakdown of what this looks like for a driver, here’s my year so far. The average trip is 58 miles from garage to garage in a vehicle that costs $0.70/mile to operate, so my expenses are $39. My average rate for the year is $83 with a 23% gratuity, making the total revenue per trip $102. Deduct the $39 operating expenses and the $7 booking fee and I’m left with a net of $56 ($19 of which is gratuity). In terms of time, customers are in the vehicle for 30-40 minutes, but there’s obviously additional commute and wait time, I’d say my average trip is 1.5 hours, putting me around $37/hour net.
To breakdown another driver: 64 mile round trip, $0.60/mile operating costs, average rate of $80 + 21% grat is $97 - $38 -$7 = $51 net
So overall, that small portion of non-tipping customers wouldn’t change my life in the slightest, we’re talking maybe $1,500/yr. But it is kind of crappy when you do one ride and make $20-25 less than the next. I’ll make a note of that, and the next time that person needs a ride, I may decide it’s not worth my time, even though it would still be profitable and roughly $25/hour. So rather than take it myself, I’ll kick it over to one of our affiliates, give them the heads up, and let them quote it how they’d want.