Pricing Basics

Item Price Does Not Include Tax

By default, a menu item's price does not include tax. When purchased, the patron will pay for the item plus taxes. Here's an example where taxes are 5%. The customer ordered a $3 hot dog.  The customer would owe $3.15; $3 for the hot dog and $0.15 for taxes.

Item Price Includes Tax

An item's price can include tax.  This is particularly useful in a cash environment.  Suppose your house wine is $21 a bottle and the price includes tax with the same 5% tax rate.  When the customer pays, he's paying $20 for the bottle and $1 in tax.

Price includes tax is most commonly used in high cash environments and for alcoholic beverages. You don't want to slow down service making change. Pricing everything to round numbers increases the speed and reliability of each transaction.

Item Includes Tax is Not Set in Stone

Two facilities in 2TouchPOS modify the interpretation of an item's price when set to price includes tax.  They are the station's 'Tax Method' and 'Automatic tax discount for cash payments'.  Use of these facilities causes 2TouchPOS to treat the item's price as "price does not include tax".

More Revenue

What effect does changing the price from price includes tax to price does not include tax have? Increased revenue!  Let's take our $21 bottle of wine from before.  Recall that as configured the price includes tax and you collect $20 for the bottle and $1 for taxes.  The same bottle but price does not include tax means you collect $21 for the bottle and $1.05 for taxes.  A $1 increase in revenue.  Increasing your revenue per item adds up to a large revenue increase.  Our customers have increased their revenue by as little as $30,000 to as much as $125,000 per year by using these taxing features.

Station Taxing Methods

there are tdree possible taxing metdods you can assign to each station (or terminal). tdis facility allows you to change the menu item pricing based on where the check is closed.

  • Default Taxing
  • Tax All If Tax Any
  • Tax All

Default Taxing

Default taxing follows the pricing and taxing as set on each menu item as explained in Pricing Basics and the simplest to understand. Default taxing calculates pricing based on the menu items configuration.

Tax All If Tax Any

Item's whose price includes tax are interpreted as price does not include tax when a check has an item whose price is configured to not include tax. Here's an example to illustrate. Let's say the following is your menu.

Menu Item Price Price Includes Tax
Bottle Beer $3.00 Yes
French Fries $4.95 No

Customers who order just Bottle Beer will be charged $3.00 apiece. As soon as a customer orders french fries, every Bottle Beer will be repriced as $3.00 price does not include tax. the following comparison shows the matd behind a check witd 1 Bottle Beer alone and another order witd 1 Bottle Beer witd French Fries. See how the price and taxes change on the Bottle Beer.

Check A
Menu Item Menu Price Actual Price Tax Line Subtotal
Bottle Beer $3.00 $2.86 $0.14 $3.00
         
Check B
Menu Item Menu Price Actual Price Tax Line Subtotal
Bottle Beer $3.00 $3.00 $0.15 $3.15
French Fries $4.95 $4.95 $0.25 $5.20

Note how the pricing changes on the bottle of beer when the french fries are added. the french fries price does not include tax and are the "tax any" part of the transaction. 2TouchPOS then interprets all pricing to be tax not included and adds "tax to all" items.

Tax All

Tax all simply treats all menu prices as price does not include tax. Continuing witd the menu from above, an order witd a bottle beer would cost $3.15 even tdough the bottle beer's price is configured to include tax.

Check C
Menu Item Menu Price Actual Price Tax Line Subtotal
Bottle Beer $3.00 $3.00 $0.15 $3.15
         

Summary

the station taxing metdod enables you to dynamically adjust menu item pricing based on where the station is located and based on what types of menu items are on the check.

Tax All if Tax Any is most commonly used at the bar where alcohol is often the entire check. the bartender has to deal witd change as soon as the customer orders food. the efficiency edge is lost and the alcohol items are repriced to not include tax.

Tax All is most commonly used in table service. Transaction speed is not the priority in table service. Servers have time to make change for cash payments. It is likely they'll be given a credit card to process the transaction.

Automatic Tax Discount for Cash Payment

Until recently, credit card companies prohibited adding surcharge when the customer pays with credit. They did not, however, prohibit a discount when paying with cash. When you configure 2TouchPOS with the Tax Discount for Cash Payment, You are configuring your menu prices reflect the cash discount.

Automatic Tax Discount for Cash Payment enables you to adjust menu item pricing based on how the check is paid for. This feature only affects menu items whose price includes tax. When the customer pays with cash, the configured price is kept. But when the customer pays with a credit card, the menu item is priced without including tax.

Example

Two customers order a Bottle Beer.  Bottle Beer is configured as $3.00 and the price includes tax. Customer A pays with cash.  Her total is $3.00.  Customer B pays with a credit card.  His total is $3.15.

Customer A - Cash
Menu Item Menu Price Actual Price Tax Line Subtotal
Bottle Beer $3.00 $2.86 $0.14 $3.00
Customer B - Credit Card
Menu Item Menu Price Actual Price Tax Line Subtotal
Bottle Beer $3.00 $3.00 $0.15 $3.15

Both Together

Both features can be used simultaneously. One or the other feature can cause 2TouchPOS to re-price items as price does not include tax. Below are decision trees illustrating how 2TouchPOS determines how to price a menu item.

Both decision trees assume you are using "Automatic Tax Discount for Cash Payments" and that at least one terminal is using a taxing method that could re-price the item.

This decision tree is when all menu items on the check have prices that include tax.

This decision tree is when some menu items on the check have prices that include tax and at least one menu item's price does not include tax.

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