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.
Imagine trying to ask your customers for free money instead of just paying your drivers well. Thank goodness for the people that don’t give into the BS of “tipping culture” after paying $400 for a service and listening to an owner complaint about a $5 tip. What’s disrespectful is not knowing your history of why tips started in states in the south, the lower cost of meals to offset their tipping culture and then telling your employees it’s okay if they make less money as tips will offset the rest when tips are NOT a guaranteed thing as they are optional and NOT mandatory. Money does not grow on trees and people pay for the service they are receiving which includes a driver driving them around in the limo.
You can always add gratuity for a party of 6+ or you can raise your pricing model but just be prepared for competitors that may out bid your model.
Just from a customers perspective for whatever my two cents are worth to your business.
Thanks for the input, we have done an auto-grat when services require multiple vehicles, as sometimes those drivers are working for different companies, but together to provide the service. Like a restaurant handling a big table with 2 servers.
As for driver pay, all of our drivers are independent contractors and set their own rates. Our company just takes a booking fee.
I don’t know how/when you settle up with your clients, but I used to have a little blurb, where I’d verbally go over rates with the clients and say the rate was x/hr, and you were charged this mileage, and whatever other fees, just to make sure they knew how the total was being calculated and right at the end I’d say it very clearly but nonchalantly so that I didn’t seem pushy, “and tips are never mandatory but always appreciated-it’s customary to tip 10-20% for good to great service, but again it’s not mandatory and anything is appreciated, the guys most often will just get a 20 note each or whatever”
So our process from start to finish, in a nutshell is we receive a call/text/email/DM asking for a quote, we probe for details and give a quote without mentioning gratuity unless the client brings it up, then we’re completely honest and say that our drivers receive an average between 20-25%. Once scheduled, we connect them directly to the driver who will reach out via text as additional confirmation and so that if the client has any specific needs they can discuss them. Payment is accepted in any form after the ride, half the time it’s cash or venmo, or paid with credit card using Square on our phone or we email them an invoice that they can pay later (this is for regular clients).
Personally, when someone pulls out cash I simply ask if they need any change, and I never count it in front of them, say thanks and goodbye. And if they ask how much it is, I always say “The fare is $X.” hoping they’ll get the implication. With credit cards, the app will require them to make a selection for tip, I’ve set up my Square account to have 5 preset options: 20%, 25%, 30%, Custom Tip, No Tip. Most customers will hit 20 or 25, some will do a custom amount like $10 or $20, I’ve never had anyone hit No Tip and not give me cash on top, usually they hand me the card and a cash tip together, then I just hit the No Tip for them so they can sign and get a receipt.
I guess it would be nice if we always just did a card swipe after each ride, putting them on the spot so to speak. I certainly don’t care about a $3 card processing fee if it nearly guarantees me 20+%, but there are plenty of “cash is king” kind of people.
Most jobs that inc. tipping go thru similar ‘problems’. It tends to average out between no tip & high tip. This person may not tip, the next person may tip 30-40%. I don’t personally mind tipping, not usually.
Maybe try paying your drivers yourself instead of relying on your customers to do your job? Then there isn’t an issue.
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.
This sounds like an employment scam. If determine when and where a contractor employee goes, you’re an EMPLoYER.
If you/your drivers are contractors that set their own rate, why the whining about tips? They literally decide what they want to get paid for the jobs they take.
I’m a service provider. I set my own rates. My clients would laugh in my face if I then expected a tip on top. Just be honest about the damn price and stop playing games about tips that are supposed to be discretionary but are actually a required fee. No one is shorting you by not paying you more than you asked them to pay.
This is the way.
Maybe try some social psychology tactics- you could put certain things in the limo that discreetly nudges the client to give a tip. Research would of course need to be done so the strategy is actually effective as poor execution will have the opposite effect.
Surely there’s a good method of getting tips that’s been thoroughly tested. I’d recommend finding one of these methods.
Raise prices a bit across the board, and tip your own drivers when you feel they are not compensated enough