You specify the tip in the app at time of your hail, so the drivers know what you are willing to pay on top of the meter (my WP app provides 5, 10, and 20 kuai tip options; the iOS app is more flexible). The taxis are responsible to replying to your hail, and you are given 120 seconds per request, so if no one replies, your request simply fails. You are supposed to hail when you need the taxi, so there is no time/price tradeoff to be made. There is another service (didi chuanche?) that is higher end and more expensive (they come in nice rental cars) that you can reserve ahead of time, but the government has made it basically illegal (its still going, but they have to be smart about where they drop you off).

Note that tipping is not a part of Chinese culture, you aren't usually expected to tip. This is more like an incentive for them to come pick you up. I was already tipping 10 kuai anyways before I started using the app, it just felt like the right thing to do.