If you’re heading to the car showroom to purchase a new motor or are already there, then you might be wondering whether you should dip your hand into your pocket to tip the car salesman.
Deciding whether and how much to tip can save you hundreds if not thousands of dollars per year, so it’s certainly worth getting your tipping etiquette right.
In this article, we’ve done some digging to look into what the custom practice is for tipping a car salesman, how much you should tip if it’s required, how much car salesmen are usually paid, and the average cost of a car in the US.
Keep reading to find out more.
Do You Tip a Car Salesman? The Short Answer
It isn’t customary to tip a car salesman in the USA but you may feel it warranted if you’ve received excellent service or have negotiated a great purchase price on your new car. Car salesmen generally earn around the average salary so there is no need to tip them.
How Much Do Care Salesmen Earn and How Are They Paid?
One of the first questions you may have when deciding whether to tip a car salesman is how much they earn and how are they paid.
Some industries, like catering, deliberately pay low base salaries on the understanding that the worker will supplement their income with tips.
While car salesmen do generally earn below-average salaries on the basis of their basic pay, they are expected to make up their earnings in commission rather than through tips.
According to Forbes, most car salesmen make a commission at a rate of 25% of the gross profit of the car sale price.
OnlineAutoDealered.com, states that most cars are sold by dealerships with an average gross profit of around $2000 per vehicle. Therefore, the car salesman will receive up to $500 in commission for each car sold on the basis of these figures, although we understand the figure can be less depending on the company.
Clearly, how much a car salesman earns will depend on how good they are as a salesperson.
According to PrincetonReview, the average automobile salesman sells between 200 – 1000 cars per year, although other data we’ve seen suggests the figure is probably at the bottom end of that scale and many only sell between 5 – 15 cars each month.
On the basis of Salary.com’s figures, the average salary of a car salesman is $45,190 per year which we understand includes commissions.
Given that the average yearly salary in the US is around $51,000, it would seem that on average, car salespeople earn below that amount.
On that basis, you may feel it is in good conscience to offer a tip but one certainly isn’t expected or required.
How Much Will a Car Cost and How Much Should I Tip a Car Salesman?
Another key consideration you might have when deciding whether to tip a car salesman is how much the car will cost you.
Most people are familiar with the average costs of a car but there is obviously some disparity depending on whether the car is new or second-hand.
On average, a new car in the US is $47,000 according to ConsumerReports.org.
The average cost of a used car is $26,700 according to Statista.
The cost of a product is usually important when deciding whether to tip as in the US most people apply a percentage of 10 – 20% to the total cost of the product or services.
This is less important when it comes to tipping a car salesman as it’s unlikely you’re going to tip 10-20% of $47,000 or even of $26,700.
If you do wish to tip your car salesman, then a fixed amount is more sensible and we’d suggest $10 – $100 depending on the price of the car and the deal you’ve reached with the salesman.
Clearly, if you’ve struck a very good deal at a price below the market rate, you may be inclined to tip more.
Alternative Non-monetary Options to Tipping
If you don’t wish to tip cash, then you could should your gratitude in another way.
For example with the following:
- A positive review on Google or the company’s website;
- A thank you card;
- Gift vouchers;
- A referral or recommendation to a friend or family member.
When To Tip More or Less
There are many considerations when it comes to deciding how much to tip but you might want to reach further into your pocket if:
- The salesman has negotiated below his bottom line and you’ve struck an excellent deal;
- If extras have been thrown into the deal such as an extended warranty;
- If you’ve received an excellent part exchange deal;
- If the car has been reserved for you despite interest from other buyers;
- If the salesman has been professional and courteous;
- At Christmas or during other holidays.
You may also think twice about tipping if:
- The salesman has negotiated hard and you’ve received a poor deal;
- The salesman was rude, unprofessional, or pushy;
- The sale price is above average.
There is no hard and fast rule when it comes to tipping car salesman other than it’s not usual customary to tip them.
While their basic salaries are often poor, they supplement their income with a commission made on the sale of vehicles so their take-home pay ends up being close to or just under that of most other workers in the US.
If you do wish to tip your car salesman, then we suggest $10 – $100 is adequate but you certainly won’t be looked upon unfavorably if you don’t tip.
Most car salesmen are happy to receive verbal, or written praise in the form of a review or, better still, a referral to a friend or family member so they can hopefully earn commission on another sale.