Comment by pwg
7 hours ago
> Likely, it's just more of the media, talking heads, and youtube personalities trying to turn a nothing into something, story.
It's not. Some US states have laws on the books that make it illegal for retailers to round up. The turmoil is that if the retailer can only round down to the nearest five cents, then they stand to lose from one to four cents per cash sale for any sale that is not a multiple of five cents. Add those one to four cent losses up over a large enough number of transactions and the retailer stands to lose a considerable sum over the course of a year. And many retail shops already operate with thin margins anyway, so the loss from "always round down" could erase whatever thin margins some shops already operate under.
> then they stand to lose from one to four cents per cash sale for any sale that is not a multiple of five cents
Which is much less than they're paying the CC companies on card sales.
If it means shops stop charging $4.99 and start charging $5.00, I will be ecstatic.
Problem is it isn't just the $5.99 rounds to $6.00 it is tax. If the end cost is $6.36 will the state be happy with that one penny less? For any state 1 penny per transaction is millions of dollars per year! (note that I had to change your price from 4.99 to 5.99 - 5.00 times any tax rate is an even multiple of 5 and so cannot make the point).
In Canada, the rounding is done after tax, and only affects what the cash-paying customer or vendor receives. The sales tax amount is not affected.
If your shop can be wiped out by losing that little on each transaction it wasn't long for the world anyways... Retail margins are thin by industry preference but they're not 1-4 cents per transaction thin.
Er... So just adjust prices to whole multiples of 5 cents? Helps math-challenged cashiers too...
Prices in the US are not tax-inclusive, so the effect of sales tax ruins that plan.
And sales tax varies a loooooot, and change constantly
There's 12000+ distinct sales tax regimes in the US
https://sovos.com/content-library/sut/state-by-state-guide-t...
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I wonder if this could encourage retailers to start advertising tax-inclusive prices. That way there's no rounding in the customer transaction (if they set all their tax-inclusive pricing at multiples of 5 cents), and then the sales tax would just be calculated in aggregate, and paid electronically with no rounding.
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So they just make the price with tax a multiple of 5 cent and still show the price without.
Is the tax unknown at the time of setting the price? If that's the problem, set the final price at price + tax, deduce tax, display that. What's the matter?
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They can add a "total not divisible by 5" fee, ranging from 1 to 4 cents
The other direction avoids a lot of stupid complains. Nobody will complain if the shop gives them a $0.04 gift.
The shop will. It can be a lot of money in aggregate. It also creates really pathological purchasing incentives, where spreading out large purchases over several small purchases can yield significant savings for the purchaser.
There's one exceedingly simple answer:
Keep the penny (possibly a new one that is cheaper to make).
We're basically breaking into jail on this one, creating more problems than we're solving.