# Am I calculating this correctly? Buying a discounted coupon results in more money spent than saved

Here is the scenario I'm sure everyone is familiar with. I am debating on whether or not to buy a gift certificate at a discounted rate from a popular coupon site. Am I doing the math right on this? Here are the details for said coupon in question..

\$25 gift certificate for \$15 for a local restaurant. Stipulations for using coupon are \$35 minimum purchase and 18% gratuity added before discount.

Let's say I spend the absolute minimum to be able to use the coupon..

• Meal..............................\$35.00
• Gratuity (18%).............\$6.30
• Total before discount....\$41.30
• Minus discount............(\$25.00)
• Plus cost of coupon.....\$15.00
• Net money saved.........\$3.70

Now let's say I spend \$60 at the restaurant...

• Meal.............................\$60.00
• Gratuity (18%).............\$10.80
• Total before discount....\$70.80
• Minus discount............(\$25.00)
• Plus cost of coupon......\$15.00
• Net money saved.......\$(0.80)

I would have actually spent 80 more cents when using the coupon?

• I usually wait until the coupons from Restaurant.com are on sale for \$2 or \$4 for a \$25 off coupon. When it costs \$10 or \$15 for a \$25 coupon full of conditions I don't get enough value vs. headache for the deal. Jan 16, 2012 at 18:39
• Sometimes they're \$1. ;) Jan 16, 2012 at 19:39
• Ah, I did not know they did deep discounts like that from time to time. Jan 17, 2012 at 15:54
• is the difference ment to be 60.80 compared to 60 or to 70.80? I would say that you are saving \$25 but it is costing you \$15. Edit: just read the first answer, derp. Jun 6, 2013 at 10:57

The coupon should save you \$10 either way, assuming that you meet the criteria for using the coupon.

You're figuring out the discount based on the cost of the food alone. You should be including the tip in your calculations.

Yes, they're tacking on something that is otherwise optional, but that's because enough people forget that the server works just as hard regardless of whether there's a coupon involved or not. So, restaurants build the tip in to keep employee morale up, which in turn encourages them to keep a good level of service up.

I guess it gets down to how much you tip. If you typically don't tip -- which would be rather impolite -- then yes, you do lose money with a \$60 meal. If you tip 18%, then you save exactly \$10 (\$70.80 - \$10.00 = \$60.80). If you normally tip 10-15% -- a customary range -- then it's somewhere in between.

Edit: Following littleadv's discussion on this question, I am assuming that the 18% goes directly to the waitstaff and is more or less expected. If it doesn't (in which case one might choose not to tip at all because it would just line the pockets of the restaurant owner) then you're absolutely correct in figuring out the value of the coupon by treating the 18% as a tax.

• But he did include the tips in his calculations. Why would you tip twice just because you use a coupon? Jan 16, 2012 at 18:18
• @littleadv in example one the substraction should be the delta between \$31.30 and \$41.30 not between \$31.30 and \$35.00 Jan 16, 2012 at 18:38
• @mhoran_psprep - why do you assume leaving \$10 tip on a \$35 meal as something a sane person would do? Generally, I disagree with the idea of tips entirely, it should be something you leave for outstanding service, not a default payment. I do leave tips, but almost never 18%. My default is ~10%, unless I was really impressed, and even that because of the social pressure, not because I want to. Jan 16, 2012 at 18:44
• @littleadv Some states don't differentiate between tipped minimum wage and non-tipped minimum wage. The tip percentage is typically lower if the tipped minimum wage is the same as the non-tipped. However, in my state, restaurants aren't obligated to pay anything at all to employees if their tips alone are higher than the non-tipped federal minimum wage. They literally are working for tips at that point. How you tip is your business, but servers remember who tips well and who doesn't from their regular customers, and it will come back to you. Jan 16, 2012 at 19:09
• mbhunter - actually, in the state where I leave, the law treats mandatory service charges (like the gratuity charge in the coupon) and tips differently. Basically, by the California law, the 18% charge is not a tip at all, and the server might not get any of it, and most likely doesn't indeed get any of it. That's why the coupon explicitly requests tipping the server, and that's why tips shouldn't be part of the equation. Jan 16, 2012 at 19:13

Very Interesting Math. Plain and Simple, it saves you \$10.00. When 18% goes above \$10 you loose the money, you save if it is (18% of the baae bill) is less than \$10.

This raises few questions:

1. You are forced to give out 18% tips. You may wish to keep it at 10-15%. You have no choice.

2. All thing considered, better to avoid such coupons. They force you to spend money, they force you to spend in a particular way and they force you to give a tip, you may not be inclined to.

• As I mentioned in my response - the 18% gratitude is not tips and shouldn't be considered as such. Most likely the servers won't get any of this money. Jan 17, 2012 at 2:14

You're calculating it exactly right. I wrote about this one on my blog a while ago. Lesson learned is that nothing comes for free, and you can take the saying "there are no free meals" quite literally in this case.

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