With a coin shortage, why don't stores round their pricing (to include tax if applicable)?

I understand there’s a coin shortage here in the US. While I normally use a debit card, it got me thinking about why stores don’t round their pricing to the next dollar (to include sales tax).

For example, here in my county, local state sales tax is 5.1250%, and the local county sales tax is 2.1875%, totalling 7.3125%. For the sake of my argument, food and “necessities” are not sales taxed, so we’ll go with a book, or a hammer.

If the hammer normally costs $18.99 at the hardware store, the total sales price (with my local sales taxes) would be $20.38. ($18.99 x 1.073125, rounded up). Why wouldn’t the store just round up the total price to $21.00, by listing the price as $19.57? (19.57 x 1.073125 and rounded is $21.00)?

I imagine most inventory systems can flag taxable / non-taxable items, and pricing can be set according to local sales taxes to round up accordingly. Labels on the shelf can be printed to include the tax, so that hammer’s tag/label would say “$21.00 including tax.” Non-taxable item? Then that gallon of milk will cost you $3.00 flat.

The benefit? Those carrying cash can pay with full-dollar bill notes, reducing the need to make change with coins. It also lets consumers do some budgeting a little better by totalling up their grocery/hardware bills in full-dollar amounts. Merchants can squeeze just a little more margin out of sales.

So is there a reason more stores don’t start flat-pricing, to include sales tax on taxable items?

Tripler
Honest question.

In the U.K., it is obligatory to include VAT on prices shown to consumers. And I agree that it’s a far more sensible system, and not just when there’s a coin shortage. But I think it could only come about if it were made mandatory by law for all stores, no store is going to volunteer to start unilaterally displaying prices that look higher.

It would be difficult to completely re-price all displays. Then, there’s the problem of cost by weight that is common for grocery items like meats, produce, deli items, hot foods, etc. Last, customers are going to be pissed that prices went up (and you know they won’t be going down) for all items.

Rounding to the nearest dollar amount per item is the wrong level of granularity. You’d want to do that for the final transaction amount. I think that’d be easier to implement and understand. And it gets around the bulk goods issue mentioned above.

That’s orthogonal to prices including tax, which is how I’m used to seeing it in other counties. I’d prefer that too.

I think even with the coin shortage rounding to a dollar is probably a step too far. This comes up frequently in countries that retire their smallest denomination coins. I remember when South Africa dropped the 1c coin stores would round to the nearest 5c, not sure if they’ve extended that further since. They should totally retire the penny and do that here too.

I think the main reason is that it would be overly complicated for what should hopefully be a short term problem.
The other reason is that you either have to charge customers more or take money out of the owner’s pocket. Neither of those options are going to go over well.

Stores, at least around here, have to re-price their displays on some sort of a regular basis; each of the shelf labels has an “expiration date” for that price.

BUT you raise a fine point about cost-by-weight items, which I hadn’t considered. I’m glad I asked. . .

IIRC they do something similar in Canada, rounding prices up to the nearest nickel. Where does/would that extra couple of pennies go–to the merchant?

Tripler
This is where I got my sales tax figures.

Oh, I thought of another thing. Patrons buying food using SNAP benefits don’t pay state or local sales taxes.

Some grocery stores where you “have” to have a club card have started rounding up, but putting the excess that you pay on your card as a credit for a future purchase.

If your total was $20.38, you’d pay $21.00 but have $0.62 on your club card that would be used as a credit for your next purchase.

I know that isn’t exactly relevant to what you asked, but it is one method stores are using in order to deal with the coin shortage, and I wouldn’t be surprised if it continues once the shortage is over.

I would propose making the switch permanent. It sounds like it’s already done in the UK, given Riemann's comment.

I hadn’t heard about this. The ‘club card’ system is keeping track of this? Interesting. . .

Tripler
I’m one of those “cash is king” holdouts.

USN commissaries overseas didn’t take pennies – the final total was rounded up or down to the nearest nickel.

I kept track for a year of how much I was being over- or undercharged. The running total was never more than six cents off either way.

I know BXes overseas (Iraq / Afghanistan) were handing out paper ‘pogs’ in change, redeemable either there, or back in CONUS BXes. I wonder if they’re still doing that. . .

Tripler
Haven’t been overseas in awhile. . .

They’d round down or up, so presumably it was a statistical wash. I’m sure the merchant got (or lost) it. It would just be the price they charged.

I remember there was a large pearl-clutching contingent at the time freaked out and convinced it was all a conspiracy to round up but that isn’t really what happened. I mean, it’s not fundamentally different from the current status quo here. It’s not like bulk goods or sales tax automatically hit a round penny amount. Prices are already rounded to the smallest practical unit (a penny).

That same contingent doesn’t seem all that worried about the 9/10s of a penny per gallon at the gas station and whether that is getting rounded up or down.

One of the oldest marketing ploys is to price things at $5.99 instead of $6.00 so it seems cheaper. No way that is going away.

I was under the impression that in some parts of the USA, it is obligatory to not include the tax on the shown price – a regulatory requirement to make taxes more annoying and more visible.

Never heard of this. Sales taxes are at the state and local level so there can be a lot of different jurisdictions but in all of my experience it did not matter if the tax is itemized or not, and a receipt must reflect the total amount paid whether it includes tax or not.

But they’re not using bills or receiving coinage, anyway. They’re using a SNAP card, so this doesn’t affect them.

It wouldn’t be necessary to include the tax in the display price. As long as it came to a full-dollar amount at the register. The price tag could still show $18.99, but it rings up at $21.

I meant to post about this. Can anyone explain why there’s a coin shortage? Are people substituting quarters for toilet paper? Making nickel masks? I seriously don’t get it

[quote=“Tripler, post:1, topic:915756, full:true”]
If the hammer normally costs $18.99 at the hardware store, the total sales price (with my local sales taxes) would be $20.38. ($18.99 x 1.073125, rounded up). Why wouldn’t the store just round up the total price to $21.00, by listing the price as $19.57? (19.57 x 1.073125 and rounded is $21.00)? [/quote]
Because then your price will be $19.57, while it’s only $18.99 at the competing hardware store down the street.

A few cases like this, and you will be firmly known in customers minds as ‘the overpriced hardware store’, And that’s a really hard label to overcome.