In the News: How would you handle the end of pennies?

[Pesso]

Hey Newsies,

Today we’re looking at an article from CNBC reporting on the US potentially stopping to mint 1 cent coins, and what that means for pricing. I’d love to hear your thoughts and experiences on this! Thanks @perkits for drawing attention to this story and how it could affect business owners. 

CNBC: What the end of the penny means for the economy, your piggy bank, and the way America prices i...

The article explains that there’s a new executive order directing the US Treasury to stop minting pennies in an effort to curb excess government spending and waste, since their value is so low, and lower than they cost more to make. 

While this act only stops the production and not the use of pennies, this would take a while to have an impact on businesses. Eventually, it would affect how businesses price items and total transactions. It would change how to charge cash-paying customers after tax, whether to round up or down to the nearest 5 cents or other coin increment. The article does note that the nickel is similarly more expensive to create than its value, so that may be a future issue as well.

Other countries have already gotten rid of their lowest denomination coins, including Canada in 2013, where businesses now round all transactions to the nearest 5 cents. 

I for one welcome our new penniless future. From the beginning of my ice cream shop, we always had tax inclusive prices that were rounded to the nearest 25 cents. This made it easier for customers to pay in dollar or quarter increments, and saved us time counting things out. Towards the end, we got rid of the change altogether, and had our prices all on flat dollar amounts. This saved even more time and simplified everything altogether, including our price signs, register programming, and counting & distributing change. 

Share your perspective:

• If you’re in the U.S. – How do you feel about potentially losing the penny? How would your business handle the shift?
• If you’re not in the U.S. – Does your country still have a 1 cent coin? If yes, how would getting rid of it affect your business? If not, how did you handle the shift?

Can’t wait to hear your thoughts!
Pesso

This article is for informational purposes and does not constitute legal advice. For guidance or advice specific to your business, you should consult with a qualified legal professional.

[Donnie-M]

Good Riddance!  I love mah pennies, but I quit counting them in cash drawers a few years ago.  I do a rough estimate of either .50c or 0.  Guess what, my cash comes out the same at the end of the year.

What did square do for software in Canada?  I would love to have this option here already where we could just set cash transactions to go ahead and round to the nickel.

The nefarious side to this is that inflation is probably the real culprit.  That being said, there are lots of coins we don't use anymore.  It changes, it just has been stable a long time.

[Fetched-Up]

Only 5% of our transaction are cash anyhow.  We typically round up or round down to the nearest $.05.  If people dig in their pockets or purse for exact coinage, then they may get exact coinage back.  Many customers don't even want coins back so it ends up balancing itself out.  

[Lovewell]

*Apparently* it takes 7 cents to make a penny? I have not fact checked this. If so, economically makes perfect sense to me.

I did ring some people out today and was like hmm this would be interesting with pricing if we had to get rid of these guys. 

Overall we are just going to take it as it comes! 

[rtfulk]

The only thing I would hate about doing away with pennies is that all our items end in .99. 

[Pesso]

Oooh, how'd you land on that pricing model, @rtfulk ? 

Would you keep it as is and just round up the transaction amount or change it to 0.95 or full dollars? 

[rtfulk]

@Pesso It's physcological, people would think twice if an item is 20.00, but it it's 19.99 in their mind it's under 20.00 so they don't think about it. I think the industry calls it Charm pricing, studies have shown if an item is priced 19.99 the brain processes that price being closer to 10.00 the 20.00 making it a better deal. So I think we would keep it at 19.99 and just round up.

We work fairs in 2 states Delaware and Minnesota where there is no sales tax on children's clothing, there we just round up to 20.00. 

[Red_Ant]

Australia ditched 1c and 2c pieces in 1992!!

Any transaction comes up as the exact amount, but gets rounded to the nearest 5 cent multiple.  So, if you buy something for $9.98, it will cost you $10 if you pay cash (obviously a card transaction just bills you $9.98).  But if your purchase is $9.97, it will cost you $9.95.

There's talk of getting rid of the 5c and 10c pieces.  And in fact, making cash transactions incur a surcharge as the cost of keeping cash in the economy comes at a price!

[bonny]

As a consumer, I knew something priced, for example, $19.99 was really $20.  Never did I look at $19.99 and think it was under $20.  I don't know who came up with that logic but it never worked on me.  I may be the only one who figured it out as a kid.  

As a business, I've never ever priced anything to include pennies so if they do away with them, I'm fine with it.  I also have to add, for fairness, I live in a state that doesn't have sales tax so pennies weren't a problem. 

However, this summer I'm adding a market location across the river in Washington so my tune may change since I will have to charge 8.2% for the location I will be in.  No doubt that will involve pennies.  I haven't worked that all out yet.  Maybe I'll work it into my prices so it's just an administrative function to pay the sales tax so I don't have to worry about having a pile of change on hand for change.  

Turns out this is a good question since I hadn't given it much thought in relation to the penny going away.  How do you give change on those odd numbers if there are no pennies?  Yup, yup... going to have to think this through.