This is a topic I never thought I would write about but after two incorrect bills/tip amounts, it’s time for a little Math review!
Say you go out and have lunch with a friend. After the bill comes, you look at what you ordered and add on the tax and tip 15%. You then put your cash on the tray. Your friend does not have cash and must pay by debit. Your friend takes the tray to the cashier and the cashier enters the remaining amount into the debit machine. Your friend pays the amount and tips 15% as well.
You both leave the restaurant happily. But, the server only receives an 8% tip. WHAT? How did this happen?!
Let’s use some real numbers to see what happened here.
You order a grilled chicken sandwich for $7.99 and your friend orders an orange juice for $2.99 and a pasta salad for $8.99 -> The bill is for $19.97 before taxes and $20.97 after taxes. (using Alberta’s 5% G.S.T rate)
You put $7.99 into your smartphone’s calculator and calculate that it is $8.39 after tax. You then multiply that by 1.15 to calculate the total amount with a 15% tip. The total is $9.65! You decide to round up and put $9.70 on the tray.
Your friend takes the tray to the cashier. The cashier sees that there is cash and subtracts $9.70 from the bill. $20.97 minus $9.70 gives us $11.27, so that is what is entered into the debit machine. Your friend presses OK to continue and is prompted to enter a tip. She decides to use the % amount to make things easier. She enters 15% for the tip amount and the total now becomes $12.96 ($11.27 multiplied by 1.15). She pays $12.96 and you both happily leave the restaurant.
You both paid your bill and tipped 15%. Right?
Except… you didn’t.
The amount you paid, $9.70, plus what she paid, $12.96, is $22.66 total.
But if we take a look at the bill again, it was $20.97 total after tax. So how much did you really tip?
$22.66 - $20.97 = $1.69 After subtracting the total, the two of you tipped $1.69… what percentage is this?
$1.69 divided by $20.97 is a sad 0.08059… you only tipped 8%.
What went wrong and where?
Let’s look at each person’s bill separately.
Your total amount should be $7.99 + Tax + Tip. Assuming you tip on top of the tax, you can multiply 7.99 by 1.05 and then by 1.15, this gives you a total of $9.64. You paid $9.70 so you have paid the correct amount.
Your friend’s total amount should be $2.99 + $8.99 + Tax + Tip. If you multiply (2.99 + 8.99) by 1.05 and then by 1.15, you get $14.47. This is what your friend should have paid.
But she only paid $12.96! Your friend underpaid.
What happened was that by subtracting your total amount (including tip) from the combined bill total, your cashier used your tip to pay for part of your friend’s meal.
So when your friend tips 15% on the debit machine, she is only tipping for the remaining amount (which is less than what your friend should pay already).
The way around this problem?
1) Both people are paying by credit/debit
Ask your cashier to enter the items you ordered. You can then tip according to the % option.
2) One is paying by cash and one is paying by credit/debit.
The person paying by cash calculates their total amount including tax and tip.
a. The person paying by debit asks for the remaining amount on the bill, but tips by AMOUNT - a % of the WHOLE bill.
b. The person paying by debit calculates his/her total amount including tax and tip and asks the cashier to enter that total amount into the machine. They then select $0 when prompted for a tip.
Let’s rewind and try this again.
Using method a.
You pay $9.70 by cash. The remaining amount on the bill is $20.97 - $9.70 = 11.27
Your friend pays $11.27 plus the tip for the WHOLE bill ($20.97 x 0.15 = 3.15), her total is $14.42 through the debit machine.
$9.70 (your amount) + $14.42 (her amount) = $24.12
$24.12 (total paid) - $20.97 (bill total) = $3.15 tip which is exactly 15% !
Using method b.
You pay $9.70 by cash. Your friend looks at her items to calculate her total amount.
($2.99 + $8.99) * 1.05 = 12.58 after tax. Adding a 15% tip brings it to ($12.58) * 1.15 = $14.47 She asks the cashier to enter $14.50 into the machine and pays it without adding any tip in the machine.
$9.70 (your amount) + $14.47 (her amount) = $24.17 total
$24.17 (total paid) - $20.97 (bill total) = $3.20 which is a 15.3% tip
The right total and tipping percentage = happy customers and servers.
I personally think the easiest way is to never use the “remaining amount on bill” method and just figure out your own total including tax and tip. Everybody could use a little more math, right? And with even the oldest cell phones having calculators, there’s really no excuse!
And now you know why they glare at you after you have both “generously” tipped 15%. ;)
Hope that explains things! Please feel free to comment below if I’ve made any incorrect calculations or if you have any further questions.
I’m so glad I’ve put my Math major to a good use.