Is a Gratuity and a Service Charge the Same Thing?

If you don’t work in the world of events, the terms service charge and gratuity can seem like the same thing.  They are definitely not the same thing.  And, confusing them could negatively affect your wedding budget.

What Is a Service Charge?

A service charge is a mandatory and automatic (pre-determined) fee. Your venue vendor, such as catering or audiovisual charges a service charge for the service personnel. Pro Tip: Most hotels in the Washington DC area charge a service charge (typically 20 – 24%) on their F&B invoice and on their audiovisual invoice.

What is a Gratuity?

A gratuity is a voluntary fee. You (the client or customer) determine the amount of gratuity. The client and/or customer gives a gratuity to the service personnel in exchange for a service performed. A gratuity is also known as a tip. Here is an example:We typically give a gratuity to the waitress for great service.

What’s the Difference Between a Service Charge and a Gratuity?

Many people will ask if a gratuity and a service charge are the same thing. They are not. Here’s a quick breakdown: A service charge is mandatory and the venue or vendor determines the amount. The gratuity is at the discretion of the client/couple.

Pro Tip: Most service charges are taxed, so a 24% charge could be as high as 34% when it is all said and done. (ouch!)  So, I recommend reviewing these charges with your vendors beforehand to ensure that you plan your wedding budget accordingly.

More Information About Your Wedding Finances

For more details related to your wedding finances, download our bundle of budget worksheets and vendor gratuity guidelines here.

Love and Soul Always, Kawania

P.S. If you’re interested in booking me as a wedding industry expert for your event, news segment or podcast, click here to learn more.