Getting rid of pennies

written by bryan on March 8th, 2007 @ 05:45 AM

Bethany and I were sitting around talking about pennies. The way she phrased a comment made me realize something:

We don’t need a government mandate to get rid of pennies.

This can be done at the grassroots level, and it would benefit both consumers and retailers. All that would be required is that if a retailer owes you a few pennies in change, they give you a nickel instead. A lot of them occasionally do that already, but why don’t they always do it, program it into their till, and advertise it?

I know that a store with a sign saying “No pennies here: we always round down to the nickel.” or “No pennies here: any time we owe you one or several pennies in change, we’ll give you a nickel instead!” will score karma with me. Goodwill for the price of 0-4 cents on every cash purchase? Stores pay a lot more than that for goodwill!

If you use a credit card or a debit card, they’d still charge full price, but when you pay in cash, they’d knock 0-4 cents off the final bill to make it an even multiple of 5 cents.

And once somebody’s doing it there’d be pressure on other stores to do it. It’s a cheap way to make customers happy. And happy customers are repeat customers.

Comments

  • Jason on 10 Mar 08:26

    The real problem is that after-tax prices are not round numbers. Retailers charge odd prices to force their cashiers to make change. This ensures that the transaction goes through the register instead of into the cashier’s pocket. I suppose it’s cheaper than paying their employees enough to be able to trust them around money.

    So your proposal is incomplete. It would keep these odd prices on the till, but make the cashier do manual arithmetic on the fly to calculate the actual price. Better to adjust prices on the shelf so that the after-tax total is a multiple of 5 cents.

    Here’s another proposal: post the after-tax prices in the first place! Then customers will know how much their items will actually cost them. And if this makes nation-wide advertising too expensive, well maybe retailers should lobby provincial governments to adopt the Harmonized Sales Tax.

    If they absolutely must, retailers can continue to charge $5.95 instead of $6. Apparently customers are still fooled by the lower significant digit.

  • Marie-Elizabeth on 10 Mar 23:55

    Hey, I’m in Australia and it funny that you mention that as they don’t use pennies here. All is rounded up to nickels. Which is pretty neat! Take care! ;)

  • Bryan on 15 Mar 12:23

    Jason, you’re correct about the real problem. Some stores do adjust prices to make things round well: look for items priced at 88 cents here in Ontario. But they rarely apply that across the board, and they don’t get the positive karma from this act that they should.

    The key behind this idea is that it is something a single retailer can implement and gain a competitive advantage. Posting prices including tax is a disadvantage for the retailer unless everybody else does so.

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