Economics of Tipping for a Coupon Service (pay, rate, increase)
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When using a "groupon-type" deal at a hair salon, do you tip on the cost of the coupon or the supposed "value" of the coupon? For example, if you purchase a coupon for $75 and the deal says it's worth $125, would you tip on the $75 or the $125?
I know this is getting a bit existentialist, but it occurs to me that when it comes to salon services, the prices can be rather subjective. There really isn't a stardard fair market value for salon services. So salons can basically charge whatever they want, and the customer is subject to pay the tip on that price whether it is merited or not. For example, if you go to a Great Clips or something like that, you are going to pay around $10 for a haircut. Yeah, I know that the general quality of the salon and the time spent on you as a customer is minimal in comparison to when you go to salons that charge upwards of $50 for a haircut. I'm not sure that the quality of the hair dresser is that much different in terms of training and experience. I'm not talking about the hair stylists that have gone above and beyond in their training and charge about $100 a haircut (in my opinion, well deserved). I'm talking about those middle of the road salons that charge $50/haircut. I've been to those, and quite frankly I don't see that much difference between quality of cut, experience, training, or customer service than, say Fantastic Sams or Great Clips, etc. So, possibly the reason why you are paying $50 vs. $10 is simply because of overhead: higher rent, coffee machine, fancier stations, etc., but you're getting the same haircut. Sooooo, my question remains, why pay tip on the perceived value of a haircut that the salon owner has set? Shouldn't it be based on the value of the actual service (the coupon)???
If a merchant says he/she will charge xx for a product or service, but today he/she will offer the same product/service at a discount, and the customer pays the agreed discount price to receive a voucher for said product/service to be redeemed at a later time, than that price should be the one that the tip is based on. Isn't that the whole premise of a free-enterprise economy? The merchant wants to offer the product/service at a discount for a myriad of reasons (to promote a new business, entice old customers, or whatever), and the customer accepts the price because of the opportunity that is presented at that time. When a merchant and a customer agree on a price, isn't that the price that tips should be based on? Are there any economists out there that can clarify?
However, I typically view two costs associated with services where a tip is appropriate - the first is my cost to the establishment for the product, of which the server will get a share
the second is a my cost to the server who is actually providing the service
Your scenario could be reversed and say that if you are used to getting $50 haircuts and tipping X amount, why would you tip X/5 for a $10 haircut when the same level of service was being provided?
Spa services, etc can be a bit more difficult - especially since some exist in a constant state of promotion
However, for food I look at things like Groupon, happy hour, coupons, etc as being a discount on my price to establishment without having any impact on what I would normally pay to the server providing me the food - so I tip as if it wasn't discounted
Why don't you just tip what you feel it is worth? I tip $5 on my $10 haircuts. I'd never get a $100 hair cut, and I'd certainly never tip $50 for it. If I have a lengthy breakfast at a diner with a group of friends that runs a couple hours and the waitress doesn't get snarky and keeps coming around, I'll tip $5-10 on a $10 breakfast as does everyone I eat with. If I go to a fancy restaurant where the tab comes to $50 and I get the service I'd expect at Denny's, I tip like I'm at Denny's. There's your $2-3 tip for bringing bringing my food and drink (while spilling it) and then never coming back.
When using a "groupon-type" deal at a hair salon, do you tip on the cost of the coupon or the supposed "value" of the coupon? For example, if you purchase a coupon for $75 and the deal says it's worth $125, would you tip on the $75 or the $125?
One doesn't need to be an economist to answer your questions.
You should tip on the non-discounted amount.
Quote:
Originally Posted by flourpower
There really isn't a stardard fair market value for salon services. So salons can basically charge whatever they want, and the customer is subject to pay the tip on that price whether it is merited or not. Sooooo, my question remains, why pay tip on the perceived value of a haircut that the salon owner has set? Shouldn't it be based on the value of the actual service (the coupon)???
Your argument is losing steam. You are mixing arguments about tipping on the coupon with discussing how much hair services should cost in general.
The tip amount should always be based on the pre-coupon value of a service.
Hair service pricing depends on lots of variables:
Location
Salon overhead - rent, furnishings, advertising...
Perceived hipness (subjective factors)
Quality, experience, education of stylists
Station rental
Amenities
Etc.
If you perceive that there is no value above a $50 haircut, then don't go to a salon that charges $100 and tip for $50. That makes you a cheap customer.
Tip on the full amount! You know what the full amount is before you use the coupon, so just factor it into your total while deciding whether or not it's worth it to you to redeem your coupon. If you think the discounted rate plus tip (based on full value) is still too expensive, don't use it. It's not fair to stiff the stylist at a high-end place just because you could -- but choose not to -- get your hair cut somewhere cheaper. I agree with the others that it's not a question of economics, it's a question of the normal etiquette/protocol in this country.
For a Groupon or similar discount, tip on the regular amount. You are KNOWINGLY purchasing a one-time, discounted service off what it normally runs the public to buy said service. The service isn't "worth" less due to a Groupon, nor should the person doing the service at a discount because the owner wants to increase traffic/awareness be punished with lower tips. Tip as if you are paying full price, and be happy you saved 20-70% on the service itself!!
When using a "groupon-type" deal at a hair salon,
do you tip on the cost of the coupon or the supposed value of the coupon?
WTF is "supposed" supposed to mean?
The menu says it's $20 for the steak platter or it's $30 for the cut&wash... that's the value.
That is the value of the good or service being received. Take it or leave it.
When it comes time to paying for that good or service...
being able to use a coupon for a portion of it doesn't change anything.
OP: You are reason #1 that most service personnel hate dealing with customers bearing coupons. And the reason many merchants won't even bother to offer coupons.
Most of those type of coupons, have it printed on there somewhere, to tip on the amount BEFORE the discount.
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