Initial Service Failure and the Size of the Gratuity: The Role of Mindset

Abstract

A gratuity or “tip” is a price a customer pays, over and above the posted price, for a product or service and is a means for the customer to aid management in determining service quality. The gratuity is often a substantial portion of the server’s income. The size of the gratuity can vary from situation to situation and while there is a stream of research on why people tip, this paper proposes combining the aspects of service failure and the customer’s lay theory, or “mindset” in reaction to service failure to determine the size of the gratuity.