The 144 Million Dollar Button

http://notes.unwieldy.net/post/22958656041/the-144-146-165-button

by endtwist • 14 years ago

147 74 14 years ago

notes.unwieldy.net

corin_3• 14 years ago

I wonder if they've ever AB tested, somehow doubt it.

Would tips go up if the buttons were changed from 20/25/30 to 25/30/35, or would people type in their own amount more, or pay no tip more? What about if there was only one suggested tip rate, 25%? Or a slider you could drag from X to Y? Or...

maybird2• 14 years ago

Or maybe skip the fancy UIs and recommend paying cash for tips?

As someone who's worked service jobs in my youth, I'd really like to stress the importance of cash over CC tips.

Pay is usually abysmal and CC tips don't always make it into the pockets of the people who deserve it, not to mention the delay.

Also, cash is easier to split when necessary. For example, between the wait staff and the kitchen staff.

So please always tip in cash.

corin_3• 14 years ago

I was under the impression that generally (maybe this is a UK thing?) credit card tips get pooled and shared out between staff, whereas cash tips, although they sometimes get pooled, are more likely to go straight to the person you give it to.

Either way, it's not really relevant to this story..

Semaphor• 14 years ago

In Germany, tips using EC-cards or CCs get taxed. Tips in cash don't.

gergles• 14 years ago

No, I'm not going to support your tax evasion.

droithomme2• 14 years ago

As long as we are forcing people to pay a surprise tip at the end of the trip and celebrating how much cash we are raking in, why not make the tip amounts 5000%, 10000% and 100000%, with jail time for those who don't pay the minimum tip? Fits in with the rest of the horrific police state that the thugs in control of New York government have implemented there. Saves the cost of a trip to North Korea, with all of the authoritarianism!

corin_3• 14 years ago

You need to go read up on what a tip is if you think it is "forced", or indeed a "surprise". And the buttons for quick tip-giving are nothing to do with the government, either.

speg• 14 years ago

Technically, three buttons.

ralfd• 14 years ago

Technically correct -- the best kind of correct.

robryan• 14 years ago

I always wonder why they just don't build this tip amount into the price, factoring in a decent wage for the driver. These kind of things seems similar to having the cheapest price for something online but making up for it with inflated shipping charges.

newbie12• 14 years ago

You don't have to tip at all if you get poor service.

adgar5• 14 years ago

You haven't met New York cab drivers. A lot of them treat passengers like less than cargo. Here's the one time I didn't even tip at all.

I'd just had an enjoyable but naturally stressful night seeing an ex who came into the city from westchester for the day. I left her at grand central and couldn't be fucked to take the subway, but it was 11:30 at night on Friday at grand central - tough to find a free cab. But after only a few minutes of strategic searching, I finally manage to spot an open cab on the clock - score!

Now you should know this crucial NYC cab law:

> A Driver who has been dispatched must not refuse, by words, gestures or any other means to provide transportation to a person who has prearranged the trip with a destination within the City of New York, the counties of Westchester or Nassau or Newark Airport. [0]

All "prearranged" in a cab means is that the passenger is in the cab and told the driver a destination. It's a really important law - for one, it means cab drivers can't refuse destinations based on race/socioeconomic status/etc. Not all cab drivers like this law because it impacts their take, so they'll try to avoid picking you up.

Anyway, this cab driver notices I've spotted him from about 20 feet away and starts rolling down the passenger window, asking where I want to go repeatedly. If I tell him, and he doesn't like it, he'll get the fuck out of there before I get in the cab. I knew exactly what was going on, but I'd had a long god damn night and for once wasn't going to have it. So I just thought "fuck it," didn't say a single word, and just got in the cab and told him my block.

He's pissed as fuck because he knows that I know he has to take me there, since I ignored him outside the cab. He doesn't even try talking me out of the cab, he just slams on the fucking gas and drives like a complete asshole so he can try to get a better fare after me. I actually am sort of glad to get home quicker but it's actually maliciously bad driving. I'll still tip him though - that's a big part of his take-home.

I realize I don't have any cash, and it was only like a 9 dollar ride, but I figure I'll tip him extra to make up for hit he'll take on the credit card. When he sees the credit card he exclaims "oh come on, credit card? fuck..."

At that point, I reminded him that he had to accept the credit card, just like he had to drive me to my home, and (in as many words) suggested he accept the laws governing his trade. Then I tipped him 0 and told the stunning blonde woman getting into the cab that the driver's a prick.

[0] §55-20a-1 http://www.nyc.gov/html/tlc/downloads/pdf/2011rulebook_ch55....

temphn• 14 years ago

You are a lot wealthier than the cab driver. From his perspective, you made him lose money by taking a route to Westchester, and then lose money again by using a credit card, and then lose money a third time by not tipping him.

EDIT: Ok, not to Westchester but outside the city limits. Basically the law forced a guy who doesn't make that much money to engage in a transaction with you against his will. He wasn't the bad guy here.

sudonim• 14 years ago

What cab driver doesn't want to go from GCT to chelsea at 11:30 at night? And how has that happened enough to you that you don't want to tell the cabbie until you get in the cab? Thats very contrary to my experience with cabs. Now, if you told them you were going to Brooklyn... then I've seen the behavior you expected.

michaelochurch2• 14 years ago

Another asshole cabbie move is to drive with the "off duty" light on, because a lot of chumps think this gives the driver the right to be selective on what fares he takes (because it's supposedly his last fare of the shift and any fares he takes along the way to his endpoint are "bonus"). So a lot of them drive with the off duty light on constantly.

It doesn't actually matter. Report him if he pulls this shit.

daeken• 14 years ago

I almost didn't tip in a cab once. I got into a cab and everything was great ... then the driver ran two red lights (not lights that just switched -- he went from a dead stop while it was red) and damn near hit a bike driver. I made a comment about it and he grunted and kept going. While most likely nothing would've happened, I decided to tip him simply because I didn't know what would happen if I decided not to; I'm sure the stories I've heard are overblown, but...

adgar5• 14 years ago

You can also enter your tip manually - which I do often - so the 20%/25%/30% buttons themselves necessarily don't account for all of the change in tipping patterns.

ticks2• 14 years ago

Not being from the States I really don't like tipping, I guess at least with this system it gets rid of the variables, like is tipping expected? How much is acceptable? etc.

To me, tipping is just a sign that a business isn't charging enough for the service.

rplnt• 14 years ago

I don't understand that system either. I tip (more) when I get some extra service. Might be a beer over the mark, hint on what food to order, or even a smile. It's my choice to tip and it should be like that.

tzaman• 14 years ago

Not true. I'm not from the States either (Slovenia, to be exact) and I was working as a waiter/barman back in the student days. At the end of each month I earned more from tips than salary.

Why? Because I always went the extra mile to satisfy customers, entertaining them, telling them a joke, compliment, whatever. Telling jokes wasn't part of my job description but I did it anyway. And the only way for customers to let me know they enjoyed me serving them was by giving me tips. And it was an expensive lounge/club so they were charging enough for the beverages/service.

I guess the same goes with taxi drivers. They don't have to chat with customers. They drive them from A to B. But most of them do. To some customers, this means a lot - and they show their gratitude with tips.

ticks2• 14 years ago

I just like everything to be upfront with no hidden costs, rather than having the social pressures of paying for other people's employees. For example, would I receive a lower level of service than new customers if I returned after not tipping?

lunarscape2• 14 years ago

I don't see the need to tip either as I live in a country with a decent minimum wage. I worked in a bar as a student and tips were rare. As a result I see tipping as some kind of failure by businesses. If employees are paid fairly and the service is always good why should customers tip? (Honest question)

yummyfajitas3• 14 years ago

Tipping creates an incentive for service staff to do a good job. If you do a great job of keeping customers happy, you get paid more money.

It's a much tighter feedback loop than "if you suck, maybe your manager eventually notices, then complains to you, then fires you."

sp332• 14 years ago

In a few professions (bellhop, restaurant waiter) tips are an expected, normal part of their wages. Sometimes it's legal to pay them below minimum wage, because it is expected that tips will make up the difference.

whiskyant• 14 years ago

Tipping is pretty much 100% expected in the US for anything involving "personal" services such as sit-in restaurants, bars, salons, taxis, etc.

Typically, around 15% is acceptable - if you want to go bare minimum, 10% would probably suffice. Any less and it would be considered rude or indicates that you were unhappy with the service.

cperciva• 14 years ago

Charities achieve the same effect with their donation tiers -- people very often donate the minimum for a particular tier. Looking at the FreeBSD Foundation donors page, they've received $148,968 so far this year, and adding up the "minimum donation to be listed in this tier" numbers gets you up to about $144,000.

For that matter, I did the same thing -- Tarsnap was towards the top of the 1000-4999 $ range from its December 2011 donation (which due to accounting and postal delays counted as a 2012 donation) and yesterday I said "screw this, let's hit the magic number" and wrote them a check for the remaining amount I needed to be in the $5k+ tier instead.

I've seen multiple charitable organizations engage in lengthy debates about whether they should add an $X tier and hope that people below that level will bump up their donations or whether they'd lose too much from people who were currently donating more than $X instead reducing their donation down to $X.

almond2• 14 years ago

This number is revenue, but don't forget about cost. Cab drivers only started incurring credit card fees when the city made them start taking cards. I tip more when I use my card than when I pay by cash to help the driver offset the few-dollar fees. It's not a very high-margin business.

PeterisP• 14 years ago

There shouldn't be any "few-dollar fees". If they are paying more than 3% (i.e., much less than the change in tips) for the card transaction, then they are being robbed blind by the bank and/or corrupt officials.

pscheufele2• 14 years ago

Your math for the $144 million button makes for a good headline, but seems a bit dodgey. Plus, why is this article linked to instead of the New York Times article it references with actual information?

WHEN TIP WAS 10%: BASE REVENUE = 82,497 TIP REVENUE = 8,250 TOTAL REVENUE = 90,747

TIP UP TO 22%, ASSUMING SAME BASE REVENUE BASE REVENUE = 82,497 TIP REVENUE = 18,149 TOTAL REVENUE = 100,646

TIP REVENUE INCREASE = 9,899

CREDIT CARD FEE AT 1% = 1,006 2% = 2,012 3% = 3,018 4% = 4,024 5% = 5,030

13,267 CABS

LETS ASSUME THAT EVERY FARE WERE PAID WITH CC.

ASSUME 5% CC FEE, BECAUSE THE NEW YORK TIMES ARTICLE SAYS "higher tips are tempered by a 5 percent service fee applied to fares that are paid with plastic," TOTAL REVENUE, LESS CREDIT CARDS = 95,616

TOTAL TIP INCREASE = ~131.3 MILLION TOTAL CC FEES = ~66.7 MILLION

TOTAL INCREASE FOR CABS, LESS CC FEES = ~64.4 MILLION

Now, since the credit card tips are going to have to be fully declared for tax purposes, since they will come back to cab drivers in paychecks and with 5% of the TOTAL FARE taken out, I would actually guess cab drivers are seeing LESS MONEY than they were before the credit card machines were installed. I would bet that the 10% tip average pre-card machine is actually low based on undeclared cash tips, and having tax taken on a full 22% will drop the net significantly. When factoring in credit card fees and taxes, cab drivers are probably making less on this deal. But hey, at least Visa and MasterCard must be psyched.

NYT: Told of the statistics that showed higher tips, some drivers scoffed. “I know that’s not true,” said William Lindauer, a driver and coordinating member of the New York Taxi Workers Alliance. “They get no tips, or less tips.”

homosaur• 14 years ago

People like to pimp their own blogs on here, which is basically only a half step up from liking your own posts on Facebook.

djacobs• 14 years ago

I'm not sure that sharing on HN is analogous to liking on FB.

powera• 14 years ago

Why are you using all-caps?

The tax and credit card implications are irrelevant to the point of the linked article, which is about the framing / convenience aspect of having suggested tip percentages. Whether taxi drivers are making more money from credit cards (and you seem to have an interest in believing they aren't) is orthogonal to whether tip suggestions help them make more money.

pscheufele2• 14 years ago

Powera, this was my first thought as well, but even looking at the question this way is not realistic because the variables don't match. To answer this question, we would need to test (a) credit card machine payment without tip suggestions vs. (b) credit card machine payments with tip suggestions. By comparing machine vs. cash, the fact that cash tips would never be declared accurately skews the results to where the test fails.

sdfjkl• 14 years ago

The lesson here is that default settings are very important and you should spend some thought on them.

sparknlaunch12• 14 years ago

Why the increase? Thoughts:

1) Easier and quicker to push options (20/30/40%) than key in lower amount.

2) Pre set options may lead to mistakes.

3) Customer doesn't want to embarrass themselves by entering an anoint so just pushes a button.

4) The average fare and average cash in hand leads to per tips versus card payment. Eg Avg fare $9 and most payments with a $10 note.

5) Customers willing to tip higher due to preference towards card payments.

6) Peak in typing due to early adopters using technology.

paulgb• 14 years ago

The figures are based on the tips that were reported by drivers. Drivers have an incentive to under-report cash tips (income that's not reported can't be taxed), but not credit-card tips (which can easily be audited).

It's possible that drivers aren't earning more, they're just reporting more.

kevincennis• 14 years ago

Good. Call.

That was my initial reaction when I read this too.

droithomme2• 14 years ago

If you're forced to pay a minimum 20% "tip", it's not a tip.

superchink• 14 years ago

You’re not forced. You can enter any amount you wish. It's merely a convenience.

The 144 Million Dollar Button

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