The Odd Cent

[Peter R]

It has always been a point of curiosity for me as to why the shops still use the odd cent in pricing.

This rounding up and down thing has got to be for profit, but it is the most ridiculous set up I have seen.

$1.99 is not legal currency, I am not allowed to pay $1.99 unless I use the plastic.

I tried to pay $9.99 for an item using $9.95 and 3 odd cents that I had laying around, and they just rang up $9.95 and threw the cents in the garbage, spoil sports.

Can someone enlighten me as to the profit margin that would cover this stupid pricing arrangement.

Peter R

[beejay1]

Hi Peter,
The pricing policy is designed to achieve 2 things really. Firstly, its a marketing tool used worldwide by companies to advertise prices typically below the 10, 100,1000, etc, and oddly enough it does work. A price of $99.99 will always sound cheaper than $100 and it gives the marketeers a bit of poetic license when it comes to advertising "" all this for only $99.99" or all this for less than $100.
The margin issue is less relevant simply because large/multiple retailers will always negotiate buying prices to a targeted margin for specific product types or ranges working back from the selling price eg: a new drill is shown and the buyer reckons it will sell well at $99.99 ( the good buyer will automatically have a figure of $99 in his mind). He then calculates the cost price required to achieve his margin at that selling price.The good buyer then has negotiated almost a dollar more of margin into his profit and the bad buyer has only just hit his margin target.
Many large retailers would welcome the opportunity to round prices up to the next dollar price point and just imagine the increase that would give the large supermarkets and retailers like Walmart who sell hundreds of millions item per anum. One cent on every item sold by them would be quite considerable. The reason they dont ?, is the value of the 0.99 price point. Its a much stronger price point than you might imagine, almost sublimable.
beejay1

http://community.webshots.com/user/eunos9

[Gumby]

Is that your 5 cents worth then Peter ?? :D :D :D

[Bob Willson]

I tried to pay $9.99 for an item using $9.95 and 3 odd cents that I had laying around, and they just rang up $9.95 and threw the cents in the garbage, spoil sports.

They should have made you pay the extra cent as well. (9.95 + .03 = 9.98)

[Peter R]

Is that your 5 cents worth then Peter ?? :D :D :D
Don't be silly Gumby, this forum is an educated mix of intellectual persons trying to philosophy on the meaning of life and the cost of a 99 cent egg.

Now watch pancake Al come in and stuff it right up...Or not!!!

The odds are in favour of intellegence so far, and thank you to one correct answer, one correct question and gumby's inanity.:D :p

Peter R

[Peter R]

They should have made you pay the extra cent as well. (9.95 + .03 = 9.98)
Another interllectual, but a math genius as well, yes I stand corrected!!!!!
It was 4 cents now that I recall.http://www.woodworkforums.ubeaut.com.au/images/icons/icon11.gif

And congratulations for your quick thinking...you win the prize of the day,a slightly uses left-handed back scratcher.

Peter R

[Bob Willson]

Damn, I'm right handed. But maybe I can raffle it off. Does anybody want to buy a ticket? Only $2 a ticket and I'm only selling 400 tickets to improve your chances of winning.

[Shaty40]

I thought that $1.99, would have been a more appropriate price for the tickets.


Tim:D :D

[Bob Willson]

Sorry, I don't have change. :D

[DanP]

Peter,

You need to stop worrying about things that don't really matter. You're going to give yourself an ulcer.

Dan

[bitingmidge]

Don't listen to him Peter.... I need someone to keep the load off my shoulders.. the more you worry about this stuff, the less concerned we all have to be!!

Thanks!!

P (Who gave up worrying about anything beyond his control some years ago, and if it's in his control and worth worrying about, he fixes it so he doesn't have to!!)
:D :D :D

[Sturdee]

It has always been a point of curiosity for me as to why the shops still use the odd cent in pricing.


My good friend Beejay1 has already answered this for you, all I would like to add that this is a result of another dirty rotten Seppo trick. This ?.99 was instituted by a Seppo newspaper to get more coins in circulation so people could buy their paper by offering cheaper advertising to retailers who took part in this. :eek:


$1.99 is not legal currency,

What utter rubbish. :eek: All coin and notes ever issued by the Australian government is, always has been and forever shall remain legal tender within the Commonwealth of Australia. Even the old 1000 pound notes are still legal tender. Just because a shop doesn't want to accept them and so reduces the price doesn't make them illegal.


Peter.

[Peter R]

My good friend Beejay1 has already answered this for you, all I would like to add that this is a result of another dirty rotten Seppo trick. This ?.99 was instituted by a Seppo newspaper to get more coins in circulation so people could buy their paper by offering cheaper advertising to retailers who took part in this. :eek:



What utter rubbish. :eek: All coin and notes ever issued by the Australian government is, always has been and forever shall remain legal tender within the Commonwealth of Australia. Even the old 1000 pound notes are still legal tender. Just because a shop doesn't want to accept them and so reduces the price doesn't make them illegal.


Peter.
Now there you go Dan, If I hadn't worried about the odd cent we would never have know that it is still legal tender. Thanks Sturdee, your intellect is only surpassed by your cleverness. It is such a pity that you think so highly of the Seppos.:confused:

Peter R

[Sturdee]

Now there you go Dan, If I hadn't worried about the odd cent we would never have know that it is still legal tender. Thanks Sturdee, your intellect is only surpassed by your cleverness. It is such a pity that you think so highly of the Seppos.:confused:

Peter R

Thanks Peter. Coming from you that is a compliment :D as the last I knew you thought of me as mean and horrible. :p

Just wanted to add to your knowledge base as you seem to worry about odd things like that, or is it that you're an odd worrier. :D :D :D


Peter.

[echnidna]

If prices had to be in 5 cent multiples by law it would cost all of lots more loot to live.

The odd cents mount up in the supermarkets

Petrol wouldn't be say 91.5 cetnts per litre it would go up to 95 cents litre etc

[Munga]

Another reason why pricing was done like this (drop off one cent/penny) years ago was to promote honesty in the store by forcing the shop attendants to go to the till for change and that way they were prevented from pocketing the money particularly when sales were brisk, that was before photo surveylance,computers, electronic tills etc. But it seems alot of them still manage to do it.

Cheers Arch.

[simon c]

What utter rubbish. :eek: All coin and notes ever issued by the Australian government is, always has been and forever shall remain legal tender within the Commonwealth of Australia. Even the old 1000 pound notes are still legal tender. Just because a shop doesn't want to accept them and so reduces the price doesn't make them illegal.
I agree (sort of) all coins are legal tender, however that does not mean that a store is obliged to accept them.

http://www.rba.gov.au/CurrencyNotes/LegalFramework/legal_tender.html