Service charge

A service charge (or service fee) is an additional charge a business applies to the main price of a product or service. It’s typically used to cover the operational or administration costs associated with providing the service, such as transaction processing, customer support, or special handling. 

Unlike voluntary tips, a service charge is mandatory and is typically paid by the customer as part of the overall price of the service; and unlike taxes, it is set by the business itself and varies based on how the service is accessed or delivered.

The service charge is typically added automatically to the final bill or invoice, often as a percentage of the total cost. For example, a 15 percent service charge may be added to a hotel bill or a restaurant check.