Am I calculating this correctly? Buying a discounted coupon results in more money spent than saved

Question

Here is the scenario I'm sure everyone is familiar with.  I am debating on whether or not to buy a gift certificate at a discounted rate from a popular coupon site. Am I doing the math right on this?  Here are the details for said coupon in question..

$25 gift certificate for $15 for a local restaurant.  Stipulations for using coupon are $35 minimum purchase and 18% gratuity added before discount.

Let's say I spend the absolute minimum to be able to use the coupon..

Meal..............................$35.00 
Gratuity (18%).............$6.30 
Total before discount....$41.30
Minus discount............($25.00) 
Plus cost of coupon.....$15.00
Adjusted toal...............$31.30
Net money saved.........$3.70

Now let's say I spend $60 at the restaurant...

Meal.............................$60.00 
Gratuity (18%).............$10.80 
Total before discount....$70.80
Minus discount............($25.00)
Plus cost of coupon......$15.00
Adjusted toal.................$60.80
Net money saved.......$(0.80)

I would have actually spent 80 more cents when using the coupon?

mbhunter · Accepted Answer

The coupon should save you $10 either way, assuming that you meet the criteria for using the coupon.

You're figuring out the discount based on the cost of the food alone.  You should be including the tip in your calculations.

Yes, they're tacking on something that is otherwise optional, but that's because enough people forget that the server works just as hard regardless of whether there's a coupon involved or not.  So, restaurants build the tip in to keep employee morale up, which in turn encourages them to keep a good level of service up.

I guess it gets down to how much you tip.  If you typically don't tip -- which would be rather impolite -- then yes, you do lose money with a $60 meal.  If you tip 18%, then you save exactly $10 ($70.80 - $10.00 = $60.80).  If you normally tip 10-15% -- a customary range -- then it's somewhere in between.

Edit: Following littleadv's discussion on this question, I am assuming that the 18% goes directly to the waitstaff and is more or less expected. If it doesn't (in which case one might choose not to tip at all because it would just line the pockets of the restaurant owner) then you're absolutely correct in figuring out the value of the coupon by treating the 18% as a tax.

littleadv · Answer

You're calculating it exactly right. I wrote about this one on my blog a while ago. Lesson learned is that nothing comes for free, and you can take the saying "there are no free meals" quite literally in this case.

edit

To address the comments about tips...

I don't believe tips should be compulsory. Its my reward to the server for outstanding service. Not part of the cost of the meal. If its part of the server's salary - then I prefer not to dine in such a place (and at least in some places its illegal to consider tips as part of the salary).
The coupon in question explicitly requests tipping the server. Thus, the tips with or without the coupon are still expected, and that's why I'm not taking them into the consideration.
According to the laws of the State of California (where I live), mandatory charges, such as the 18% gratuity charge required by the coupon, are not tips, and don't have to be passed on to the employees. Thus, employees will still expect my tips on the bill, so I'm basically required to tip twice, when using the coupon.

Natwar Lath · Answer

Very Interesting Math. Plain and Simple, it saves you $10.00. When 18% goes above $10 you loose the money, you save if it is (18% of the baae bill) is less than $10.

This raises few questions:

You are forced to give out 18% tips. You may wish to keep it at 10-15%. You have no choice.
All thing considered, better to avoid such coupons. They force you to spend money, they force you to spend in a particular way and they force you to give a tip, you may not be inclined to.

Am I calculating this correctly? Buying a discounted coupon results in more money spent than saved

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