Enter the total cost of the bill and enter the percentage service charge into the calculator to determine the total service charge.

Service Charge Formula

The following formula is used to calculate a service charge on catering service.

SC = TC * %T

  • Where SC is the total service charge ($)
  • TC is the total cost of the food
  • %T is the percentage tip or percentage service charge

Service Charge Definition

A service charge is an extra charge added to the bill of a catering service to account for the serving and delivery of the food on top of the cost of the food itself.

Service Charge Example

How to calculate a service charge?

  1. First, determine the total food cost.

    Calculate the total cost of the food. For this example, we will say it costs $1,000.00.

  2. Next, determine the service rate.

    Determine what percentage of the bill is charged as a service charge. This typically ranges from 18-23%.

  3. Finally, calculate the total service charge.

    Calculate the total service charge using the formula above. A $1,000 bill with a 20% service charge would equal $200.00.

Is service charge gratuity?

Yes, most often a service charge is synonymous with gratuity. They are both extra fees charges for a service provided on top of the normal cost that depends on the performance of the person giving the service.

Is service charge taxable?

In most cases, a service charge can be tax just like any other revenue. There are unethical ways around it such as paying our service charges to employees in cash off the books, but this is not recommended.

Do service charges go to staff?

Most often at least a portion of the service charge goes to the staff. How much of the service charge that makes it to the staff depends on the business and how their operations are set up.

Is a service charge a tip?

A service charge is similar to a tip, but in most cases, the service charge has a minimum or set percentage amount that is paid. Although, tips in many restaurants are moving to a similar model.


How much service charge should i pay?

The average service charge for a catering service is between 17 and 24 percent.