I ate breakfast at McDonalds this morning. I had a sausage and cheese biscuit. The cost was a $1.13. I don’t mind paying my local or state taxes but couldn’t it just as easily have been a $1.15? Why couldn’t McDonald’s either increase or decrease the price slightly to make it even money in stead of handing those pennies back and forth? I usually tell them to keep the pennies ( maybe they are counting on me doing that but I don’t see McDonalds that hard up for money). This seems to be the case in most retail businesses. A lot of quickstop marts like 7/11 keep a tray at the register with pennies in it to take care of those goofy $1.18 and $1.06 items. I realize that a combination of items might come to an odd number but what about single items? I can’t remember the last time I paid one dollar even for something… I gotta go eat my sausage and cheese biscuit now…
Those pennies add up. If you don’t care, then I am happy for you and your finances. But don’t make it more expensive for the rest of us, thank you.
I have been saving my change in a very large jar for about 4 months and currently have just undre $200 in it. If you don’t like pennies, move to Delaware. They don’t have sales tax there and subsequently virtually every price ends in either a 5 or a 0.
HUGS!
Sqrl
Gasoline: As an accompaniement to cereal it made a refreshing change. Glen Baxter
I think this was answered by CA. But the gist as I recall was that it would be better to round prices off. However it met public resistance as everyone knows the stores would round UP not down.
Sqrl:
You carefully slide from “pennies” to “change”. Clearly, you don’t have $200 worth of pennies in that jar. I’m not sure you could pick up a normal jar with 20,000 pennies in it without breaking it. I figure the jar would have to be bigger than 10 in high by 4 in in diameter. Of course, if you do have such a collection, you’re going right down to the bank and make them count them all out, aren’t you?
Ray (Copper is organic plastic?)
Ray
Speaking of prices, am I the only one who thinks ending all prices in 9’s is a deceptive practice which should be banned? As much as you try to train yourself that $99.99 is ONE HUNDRED DOLLARS, you are still taken in, to one degree or another, and see “ninety dollars”. Of course when the sales tax is added, the ninety suddenly becomes $107.75! It’s an outrage, I tell you!! It’s not enough to get the tumbrils rolling, but it will never cease to piss me off.
The philosophers have only interpreted the world in various ways; the point, however, is to change it. (Karl Marx, 1845)
That IS a lotta pennies
I agree with galen 100%…every car and furniture salesman on tv screams 999.99!!!
but what the hell is a tumbril?
Hey NanoByte,
Well you are right, I don’t have $200 worth of pennies. It is a mixture and I admit that the majority of it is in quarters but there is still a sizeable chunk that is just pennies (about $40). I assumed my saving analogy did not come off correctly. I should have said, all the “junk change” (or change that I normally would not use) is actually a sizable amount of money over the long haul.
HUGS!
Sqrl
Gasoline: As an accompaniement to cereal it made a refreshing change. Glen Baxter
To answer the OP:
Why are prices not automatically multiples of 5?
Firstly, I would imagine that McDonald’s probably has some set prices amongst stores, and since sales taxes are local, that can introduce variety in prices. e.g. County A can have 8% sales tax, and county B can have 7.5% sales tax.
What’s wrong with pennies? What makes nickels so much better? I put the pennies in with the nickels in my wallet, and when I have to pay something, I pull out my change and use that to pay.
FYI: I remember as a child in Switzerland seeing 1 and 2 cent pieces in very rare occasions (the local dairy in our farm town sold milk and the price was not in multiples of 5.) A few years after that the government decided to stop making the 1 and 2 cent pieces and all prices were rounded to multiples of 5.
La franchise ne consiste pas à dire tout ce que l’on pense, mais à penser tout ce que l’on dit.
H. de Livry
IIRC, the whole $1.99 thing was begun by a non-trusting shop owner rather than a psych major. It’s taken longer than the 5 minutes my short attention span will allow, but I’ll find a reference eventually.
The idea was that taking in $2 even and giving back change made skimming harder to conceal: the till had to be visibly opened to get change for the customer. Also, the number of bills at the end of the day closely approximated the number of sales. Something like that.
Now, of course, there’s the psychological aspect mentioned by Galen. It pales in comparison to the oft-mentioned 9/10 of a cent for gasoline, IMHO.
Oh, and a tumbril is a two-wheeled cart, like the kind they used to carry victims to the guillotine…
If all prices are rounded to the nearest nickel, I suspect all the rounding will be up. But if it’s just a few cents, so what? Let’s see if I screw up the math here. (percentages used may not reflect reality)
Example 1 - Regular pricing
Manufacturer buys three raw materials at .27, .11, and 2.23. Total cost 2.61.
Cost of manufacture is 100%, cost of product is now 5.22.
Other expenses (marketing, etc.) add 33%, cost of product to wholesaler is 6.95.
Wholsaler sells to retailer at 20% markup, cost to retailer is 8.34.
Retailer sells to public at 100% markup, cost to consumer is 16.68.
Example 2 - round to nickels.
Manufacturer buys three raw materials now at .30, .15, and 2.25. Total cost 2.70.
Cost of manufacture is 100%, cost of product is now 5.40.
Other expenses (marketing, etc.) add 33%, cost of product to wholesaler is 7.20.
Wholsaler sells to retailer at 20% markup, cost to retailer is 8.65.
Retailer sells to public at 100% markup, cost to consumer is 17.60.
17.60 vs 16.68.
Y’all know by now that I work at Best Buy. When I first started, I would quote prices as shown, rounding off the cents. So 99.99 would become “Ninety nine bucks” when I quoted the price. I figure, fuck that. Now I round up the penny, so the customer gets a truer pictuer of the price. I’ll say “Yeah, it’s a hunnerd bucks”. Fuck the store. They’re makin money hand over fist.
–Tim
We are the children of the Eighties. We are not the first “lost generation” nor today’s lost generation; in fact, we think we know just where we stand - or are discovering it as we speak.
Rounding off to the nearest 9 cents is an old practice. Started in Chicago I think. In those days newspapers sold for 2 cents and a publisher had the bright idea of getting the local merchants to round their prices to the 9 so that customers would get lots of pennies in change (This was before sales taxes). Lots of pennies in circulation meant lots of people who could buy a a paper without breaking a bigger coin and increased sales.
JB
Lex Non Favet Delicatorum Votis
JBENZ,
That doesn’t seem to make sense–why would prices ending in 9 produce lots of pennies in change? Why not a 1 or a 6?
Cecil didn’t draw a firm conclusion on this in Why do prices end in 0.99? but JBENZ’s explanation seems to be as good as any.
Still looking for documentation on that cynical shop owner…
Regardless of how it got started, the practice is unlikely to stop. In addition to the “$199.99 isn’t $200.00” nonsense, many vendors probably just slap a straight percentage markup to their own costs and don’t care what the end result is.
I know that this thread is kind of dead, but I just had to throw in my two cents (so to speak).
I remember my mother telling me that when she was younger (in the 70s, I guess, might be a lot farther back than that) people used to hord pennies. There ended up being a shortage of them, since people kept taking them out of circulation. So, somebody came up with the idea of altering prices so that people had to spend pennies.
I don’t know if this is true, and maybe it only happened in my area, but my whole family seems to remember it happening.
Cessandra
Why sex is better than religion: No need to rest on Sundays!
Gilligan:
Presumable you’d only round the price in a cash transaction. You can still write a cheque for an ammount including pennies, even if they’re not a minted coin.
Also, you would only round the lot price up. 351 $.13 items would be $45.65, not $52.65.
Sorry, this is a bit of a tangent, I know…
I’ve spent precisely one week in the US (en route back home from Sydney to London) and the one thing that frustrated me was the difference between what stores labelled products as costing and what I forked out.
It amazed me that taxes weren’t included in the price - I’m sure it must happen in other countries, but none I’ve ever been to.
The gift shop at the planetarium I work at includes tax in the prices - but this is mainly because we deal with lots of kids all coming at once - no time to ring in individual items into the register, just take the money, give the change and move on to the next kid.
Also that gives us the opportunity to round the prices to manageable numbers (helpful because the younger kids haven’t figured out the concept of counting change just yet. some of the older kids haven’t figured it out either, turns out 