Featured Opinion/Editorial - United States Coinage Needs Overhaul Now!!!

Good thread

 

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There are a couple problems with the "averaging out" concept here. I admit it looks great on paper, but you have to realize that the purchase quantities are not random; they are driven by the type of goods and the business. Businesses know how many items the majority of customers purchase in a typical transaction and can set the prices to take advantage of rounding.

With prices that end in .99, rounding will create a repeating pattern of 0.01, 0.02, 0.03, 0.04, -0.05, -0.04, -0.03, -0.02, -0.01, 0. In other words, the business makes money on quantities of 1-4, loses money on quantities of 5-9, and breaks even on a quantity of 10. This pattern then repeats for quantities 11-20. While the sum of this pattern is -0.05 (a loss for the business) this is only if the quantities purchased are random. They are not, however, random.

For example, when you go to lunch to get a sandwich, how many sandwiches do you purchase?

If a business prices a sandwich at x.99 (including tax) and you purchase:

1. One sandwich; the total will end in .99 and it will round up. The business makes 0.01.
2. Two sandwiches; the total will end in .98 and it will round up. The business makes 0.02.
3. Three sandwiches; the total will end in .97 and it will round up. The business makes 0.03.
4. Four sandwiches; the total will end in .96 and it will round up. The business makes 0.04.

Now the rounding will cause the business to lose money on sandwich 5 through 9, and break even on sandwich 10, but what percentage of customers do you think are ordering more than 4 sandwiches in one transaction? I'm going to bet that it's extraordinarily low, and as a result, this business will make money off of rounding.

These patterns look different depending on the trailing digit in the prices, so a business that typically sells quantities of 6-9 per transaction will have prices that end in x.x1 to take advantage of rounding, etc.

 

Business will make money in the rounding up But the consumer pays more if there is no 1-5c coins
I don't think this is good for any one if we lose the 1-5 coins and I don't see it happening

 

Business will make money in the rounding up But the consumer pays more if there is no 1-5c coins
I don't think this is good for any one if we lose the 1-5 coins and I don't see it happening