Tips, Service Fees and Living Wage Up-Charges

by | Jan 11, 2023

The Cost of Supporting Businesses in the Bay Area 
By Erin Paruszewski

Operating a small business in the Bay Area is more challenging than ever. Between inflation, a global health pandemic and an already high cost of living at baseline, it’s nearly impossible to cover costs, much less make a profit. 

Businesses are implementing all sorts of strategies to do whatever they can do to stay afloat. Corkage fees and split-plate charges have been around for quite some time, but now you will notice additional line items on transactions. Living wage fees, convenience fees, delivery charges, credit card processing fees, and suggesting/requesting tips on every transaction. While to the consumer this may feel like nickel-and-diming, for the business owner, it’s essential to cover costs. 

As a price-sensitive consumer, I sometimes get frustrated by all the additional hidden or extra costs. In some scenarios, the tipping has gotten a little extreme. For example, I ordered a framed print of a photo online from a rather large corporation and at the end of the transaction, there was a suggestion I tip. There was no personalized service. There was no connection with an individual on the other side of the transaction. The suggestion to tip felt out of place. A product was purchased vs a service provided. 

On the other hand, I 100% appreciate and support the request for tips and other additional service charges in most service settings. Coffee shops, hair salons, dog grooming, Instacart, Uber, DoorDash, restaurant servers. These are places where a service is provided and said service provider has the opportunity to go above and beyond. Sometimes they do and sometimes they don’t. Unless something is egregiously horrendous, I tip anyway because that is the cost of supporting small businesses in the Bay Area. Staffing is not only expensive, it’s extremely difficult. Even if you can afford to pay your workers, there is a lack of supply and the added incentive of tips can help with attracting and retaining employees. 

I run a fitness studio in downtown Los Altos and I’m constantly caught in the middle. While we provide a service, and a rather high-touch one at that, it is not in our culture to have clients tip after class or after a purchase of retail or post-workout snacks. There is no upcharge for an extra assisted stretch or foot rub. We don’t charge extra for using a credit card, as much as those transaction fees add up. The only added fee we have, which is clearly disclosed in all of our digital communications, is a cancellation fee if a client no-shows or does not cancel within the window. More times than not, the client challenges the fee and we, as customer-centric business owners, feel like we need to take the “customer is always right” approach. Reversing fees is not good for our bottom line but we feel like we have to. Because that is the cost of doing business in the Bay Area.

In our particular case, the writing is on the wall. Our building owners are raising rent to rates that are far beyond what we can afford in this post-pandemic fitness apocalypse. At the same time, membership is still down and most clients are not amenable to the introduction of additional fees or tips. I don’t blame the clients. It’s a lot, and many people are already under tremendous financial pressure living in a place with such a high cost of living. It’s also a lot on the business owner’s end to try and forge forward when many are still drowning from the impact of COVID. I expect many other business owners are experiencing challenges similar to mine. It’s a double-edged sword. Business owners are damned if they do, damned if they don’t. Make accommodations to please customers and sacrifice your bottom line. Don’t make accommodations and angering or losing a customer who believes they are entitled to an accommodation. This is the ongoing challenge of both being a business owner and a business patron in the Bay Area. 

Friends. Citizens. Fellow Business Owners. Patrons. Owning and operating a business has never been easy. The conditions are harder than ever. Small businesses are the heartbeat of the community. If we want them to survive and thrive, we have to collectively support them and each other. Tip at a coffee shop like you would at a restaurant. Pay the cancellation fee at the fitness studio like you would if you canceled a spa appointment at the last minute. Take a step back and appreciate that we are all doing our best, and all have to do our part to help each other pull through these tough times. 



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Hi! I’m Erin and my passion in life is helping others feel better by helping them get out of their own head. So much of our relationship to food and fitness is a reflection of deeply rooted beliefs that were imprinted on us at a very early age. These beliefs drive all sorts of behaviors, many of which are not good for our physical or mental health. I know this first-hand. As a former calorie-counting cardio queen I played right into all the toxic messages about what it meant to be “healthy”. That all changed when I hit rock bottom. Since leaving my corporate career in 2009 I have been fully committed to shifting the narrative and helping people experience better physical health by unpacking unhealthy beliefs. My biggest inspiration are my two young daughters, who I hope to raise in a household that openly illuminates and addresses the misinformation instead of adopting it.