In our service-based industry, tips were considered customary for many years.
You might still feel like tips are customary, but there have been big changes in tips and gratuities in recent years, meaning huge financial shifts for us.
Changes like when clients decided that tipping the owner was something they could skip, right? That was an industry trend that came up many decades back and we have to honor it.
The change we didn’t see coming is clients deciding that tips were maybe optional not just for stylists, but the entire service industry.
Consumers want to be charged what we want them to pay, nothing more. And when you think of it like that, most of our consumer transactions are that way. Give me the total, I give you the compensation, we’re done.
We’re seeing this trend where gratuities, additional bonuses, and tips aren’t a given anymore, not just in the beauty industry, but in industries overall
Let’s shed some light on this trend and talk about what it means for you.
Know gratuity is not a given
There were screenshots of a text conversation between a client and a stylist on social media recently where the client asked for a partial refund because she realized she tipped the stylist 15% by accident. She wanted to change that tip to 5%, and would like a refund of the extra.
As you can imagine, there were hundreds of comments saying things like, “Oh my gosh, the nerve of that woman. She should’ve tipped 20% minimum and now she wants a refund” or “A 5% tip is so offensive.”
Here’s the deal: A tip is a gift, not a given. We can’t rake somebody across the coals because they only gave you $20 extra. They chose to take $20 they could have kept for themselves and gave it to you. Instead of being annoyed, you should be grateful.
If saying a tip of any amount is something to be grateful for makes you angry, take note of your relationship with tips. For you, it’s an expectation. You have a challenging relationship with financial management and your money.
You can’t be mad when a bonus tip or gratuity doesn’t come because the definition of gratuity is a tip given to a waiter, taxi, cab driver, hair stylist or other service professional. The sub definition is a gift, reward, present, donation, handout.
When you are ungrateful for that gratuity you’re given, it’s the equivalent of telling your grandma that her holiday gift wasn’t big enough and either come to dinner next year with a better gift or don’t come at all.
That’s literally the same tone and expectation when you rake your guests across the coals because the tip wasn’t high enough. Your guest came in and paid the amount that you expected her to pay for the work that you did. That’s it. They don’t owe you any money. The service was rendered. Anything above and beyond that, you should do a happy dance for.
Most high-paying professions don’t include tip compensation at all, so count your blessings that we are in a professional-based industry where the sky’s the limit and you can earn as much money as you want to and sometimes get tips.
You shouldn’t “need” tips
Maybe you think that professionals like dentists, doctors, and lawyers don’t need to make tips, but we do to pay our bills.
Again, poor money mindset comes into play. Tips can be used for a new purse, a bonus vacation, savings, or to buy your kid an extravagant birthday gift.
You should never pay your bills with your tips. If tips go to bills, mortgage, rent, gas, electricity, groceries, we’ve got problems. That’s a financial management and/or fundamental business issue. Either
a) you’re not charging enough, or
B) you aren’t growing and sustaining a scalable business at a rate that supports your lifestyle.
If you choose to have a scalable business model that supports you, tips are just gravy.
You don’t need tips to live a wealthy life
Let’s go back to that theory that we as stylists need tips because we don’t earn as much as those high paying jobs at huge corporate offices in the tech, medical, or other high-end service-based industry.
People who work at those huge tech companies make $150,000 a year, but they are at the office night and day. Yes, they get three meals a day there, but that’s because they leave only to go home and sleep. They’ll be there from eight in the morning to eight at night Monday through Friday, and spend a lot of time on the weekends working or traveling. It’s a huge, heavy load.
Is that the life you want for yourself? Did you become a hair stylist because you wanted to kill yourself to make it happen?
That’s probably not what we were shooting for when we became stylists.
In our industry, there’s literally no glass ceiling. You can make as much as you want to and work whatever schedule you want to. We truly have freedom and flexibility, unlike any other profession. You can have that stable, predictable six figure income where tips are not needed at all.
Tips are the gravy, the blessing, the funds for the trip to Bali. You shouldn’t rely on tips to pay your bills because then you resent the industry and feel a victim of a broken system. If the system’s broken, why don’t we fix it instead of being angry about it?
Preset gratuity is raising your prices
If you think the workaround to the no-tip trend is to include a gratuity that clients have to pay when they come see you, you’re crazy.
You didn’t actually build in a gratuity; you increased your prices, but then said to not tip on top of this. Now that gratuity is included, you’ve cut off the potential for somebody to leave you more.
When a preset gratuity is in place, most people choose not to leave more. They consider the gratuity taken care of and don’t think to throw another hundred on there or give you a little something extra because you were so great today. Because it’s built in, it’s done.
You didn’t guarantee gratuities you gave yourself a price increase. You said please don’t ever tip me.
If you’ve earned a price increase – and not just because you’re bitter about tips – put it in place. Don’t say gratuity included. Let the guests choose. Remember it’s a bonus, just like it says in the definition.
If you create a marketing system that has consistent growth, you’ll always have one to two price increases a year. And tips? Tips will be gravy, aka welcomed but not essential in your financial plan.
But if you’re relying on tips to pay your bills, you have no gravy. It’s an unreliable lifeline and you can’t build a strong business model on that. Change from the mindset that we are not entrepreneurs who need tips to get by. We don’t grow our business praying for tips, but by using a scalable, controllable, and fully predictable business model that allows us to live a comfortable lifestyle.