President Donald Trump says he has directed the Treasury Department to stop minting new pennies, citing the rising cost of producing the one-cent coin.
It’s called “psychological pricing”, although I’ve always seen the term “just-under pricing”.
First, it’s not even true that prices are rounded to the nearest cent. Gas is typically priced with an extra 9/10 of a cent. Fractional cents are used in accounting (like compound interest), even if they are discarded in the final results. Places that have done similar still use the small values when processing electronic transactions (credit cards), but don’t collect when paying cash.
Pricing rules can also easily adjust over time. When it was discontinued, the US half-cent was worth about the same as a modern dime. I could see us getting rid of the penny and nickel (and probably the quarter, since it won’t make sense without a nickel). Prices would then just have a single decimal place, like $9.9 instead of $9.99.
It’s called “psychological pricing”, although I’ve always seen the term “just-under pricing”.
First, it’s not even true that prices are rounded to the nearest cent. Gas is typically priced with an extra 9/10 of a cent. Fractional cents are used in accounting (like compound interest), even if they are discarded in the final results. Places that have done similar still use the small values when processing electronic transactions (credit cards), but don’t collect when paying cash.
Pricing rules can also easily adjust over time. When it was discontinued, the US half-cent was worth about the same as a modern dime. I could see us getting rid of the penny and nickel (and probably the quarter, since it won’t make sense without a nickel). Prices would then just have a single decimal place, like $9.9 instead of $9.99.