So, What’s the Difference between a Gratuity and a Service Charge?

If you don’t work in the world of events, the terms service charge and gratuity can seem like the same thing.  Here is the deal — they are definitely not the same thing.  And, confusing them could have a big affect on your wedding budget.

A service charge is a mandatory and automatic (pre-determined) fee that is typically added to your hotel invoice or catering invoice or audiovisual (lighting, microphones, etc.) invoice for the service personnel. Here is an example — Most hotels in the Washington DC area charge a service charge (typically 20 – 24%) on their F&B invoice and their audiovisual invoice.

A gratuity is a voluntary amount of money given in exchange for a service performed. A gratuity is also known as a tip. Example —We typically tip our waitress or our hair stylist for great service.

So, what’s the difference — A service charge is mandatory and it is pre-determined by the venue or vendor. The gratuity is at the discretion of the client/couple.

One more thing. 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.

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

Love and Soul Always, Kawania



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