I consider it deceptive marketing, since if a gallon of gas costs $3.11.9, as it does today in
Santa Cruz, California, the Teeming Millions (that’s me) will read it as $3.11 when it is actually
one mill shy of $3.12.
Unfair, I say. Misleading!
How did this get started?
What can we do to stop it?
How about a national protest to “Get Rid Of The .9!”
And, just because I’m in an e-mail-writing mode:
How is the price a gallon of gas determined anyway?
I mean, who actually makes that decision and how is it made?
(I want names and addresses!)
And is there price -fixing going on here? Every gas station in town
will raise (or, on rare occasion, lower) their prices within minutes of
each other.
How does the word get around that the price is changing?
Sounds suspicious to me!
We’ve had several previous threads on this, but I’m too lazy to look them up right now.
The short answer to your question is – marketing.
It’s exactly the same reason you see things in the store priced at $3.99 or $1599.99. Your brain automatically parses the price as $3 or $1500 instead of $4 or $1600.
The practice is not going to go away any time soon.
As I understand it…In many states gasoline retailers are limited by law as to how much they can mark up the retail price of a gallon over what they paid the wholesaler. This to prevent price gouging and unfair competetive practices. Most retailers make a very small profit on a gallon of gas, usually just pennies/gal., but of course gasoline is sold in very large volume so the pennies add up. Naturally, most wish to maximize their profit as much as they can, so they set the retail price as near to the ceiling as possible. If, for example the cutoff is $3.00/gal, their sale price of $2.99.9 will make more money than a simple 2.99. Given that a reasonably busy fuel stop sells thousands of gallons per day, that extra 0.9 cents when multiplied by thousands adds up to significant dollars.
Incidentally, gas sales have such a low profit margin that most outlets could not stay in business on gasoline alone. The old-fashioned service stations made most of their money on car repairs and sales of accessories & parts. The new ones make it on their convenience store sales and other services…the gas sales are mainly a draw to get people there in the first place.
Similar in a way to newspapers…advertising pays the bills (subscriptions barely cover cost of production), but nobody would read newspapers if ads were all that was there. All that trouble & effort to print news, features, stories etc. is just to get people to read the ads.
(1) Since everyone knows that the price includes those extra 9 mils, what would be “misleading” is to use a different final digit!
(2) I dimly recall price controls on gas, perhaps in the 1970’s, with the maximum price being some function of a previous price. Suppose the maximum price was 58.4 cents. Following the tradition of “ends in .9” you might expect the gas station to charge 57.9 cents. No! I recall that they charged the full 58.4 cents legal limit.
I actually saw gas for $3.098 recently. Maybe they were assuming you’d notice the 8 at the end and think it was a penny cheaper, rather than a mil cheaper? But, since the other two stations in the neighborhood were both $3.239, I don’t really see the point.
The last time I remember seeing the final digit being anything other than 9 was back in the 80s, when gas came back below $1. As soon as the first place in my neighborhood dropped to 0.999, the place across the street went to 0.998. The next day, they were both at 0.989, and that was it for the 8s for the next few decades.
You are right. It is deceptive (without being outright dishonest) marketing. That is the point. That is the point of almost all marketing really: to make you think you are getting a better deal than you would otherwise think.
Change must come from within; politicians, used car salesmen, advertisers and players have been studying the biases of the human mind for thousands of years, asking them to please stop trying to take advantage of it’s design flaws is tilting at windmills.
If I remember right, the tanks in my three scooters are all right around 2 gallons. I often buy one gallon.
Actually, I frequently buy less. One of the two cheap gas stations near me takes cash at the pump. If I’m riding by them, and a bit low, I’ll buy as much as I can get with the $1 bills in my pocket, which is often around 2/3rds of a gallon.
I buy one gallon at a time for my scooter. The gas tank holds 1.1 gallons and I try not to go around with less than a tablespoon of gas in the tank.
And anytime I see a price like $3.99, I automatically round up to $4. Heck, I do that for most things at $3.89 or $3.79, because it will be way over $4 after sales tax is applied anyway.
I honesty don’t understand who is paying such close attention to gas prices anyway. I think I know what they are in general today within 10% or so because I bought gas but I couldn’t tell you the exact details on the prices. I just picked the nearest station with the best bathroom. There is nothing wrong with someone saving a penny here or there all other things being equal but the people that I have met that obsess over gas (and postage stamp) prices are hardly the titans of the analytical and financial worlds and may even lose money being so micro-focused on such trivial savings.
Interesting you mention “older people”. Looking at an analog clock showing, say, 3:57 anyone would say “about 4 o’clock.” Using digital clocks, I sometimes hear “3 something.”
BTW, at informal stores and markets in Thailand almost everything is sold as a multiple of 5 baht, or most usually 10 baht (32 U.S. cents!) AFAIK, the 7-Eleven stores are the only places in our entire province which use the fractional-baht coins (roughly value of U.S. penny).
An exception is clothing articles which are always sold in the rural markets for 99 or 199 or 299 baht. Since there’s no tax you get 1 baht change when you buy.
