# Tip Estimation

## Calculate a new price or cost including a tip.

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Practice Tip Estimation

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A Good Tip

Credit: Angie Garrett
Source: http://www.flickr.com/photos/79908182@N00/3481628970/

Have you ever wondered about the practice of tipping? Why do we need to tip? A tip is an amount of money given to a person who works in service to others. What kind of service? Well, there are many different categories of jobs, including waiters, bellhops, hairstylists, taxi drivers, and even people who deliver pizzas. All of these workers rely on tips to make their livings.

#### Why It Matters

In the United States, there is a minimum hourly wage. This means that you can't be paid below that wage per hour—unless you work in the service industry. People who work as waiters or hairstylists earn a wage that is below the minimum wage. The reasoning is that they'll rely on tips to make up the difference between the wage they earn and the minimum wage.

Credit: Emran Kassim
Source: http://www.flickr.com/photos/emrank/3440248642/

What does this mean for people who work in those professions? With a base pay of $4.20 per hour, a waitress relies on 63% of her salary to come from tips. You can see how wait staff need to earn tips to make a living. A pizza delivery driver relies on tips for 38% of his salary, earning a base pay of$7.20 per hour. A bell hop in a hotel has a base pay of $8.70 per hour and depends on tips for 36% of his salary. When eating out, it is customary to tip a waiter 15% to 20% for okay-to-good service. But even for poor service, a 10% tip is still expected. For a pizza delivery, it is customary to tip 10% of the total bill, and a bellhop is usually tipped$1.00 for every bag that he carries to a room. Understanding and calculating tips is an important task in the real world!

#### Explore More

Check out the following video on calculating tips.

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