A Dunkin' Donuts Store Exhibits Penny Sanity

One Dunkin’ Donuts store is taking a stand against the penny. A sign at the store reads “We will be rounding your change to the closest nickel. For example, if your change is $2.03, we will give you $2.05. If your change is $2.22, you will receive $2.20. For any customer who still would like their pennies, please just ask the cashier and we would be happy to accommodate you.” The change is designed to speed up service. Here’s hoping the initiative goes viral. (HT: David McCall and Meir Lindenbaum) [%comments]

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  1. Another David says:

    This makes perfect sense. We already do this on the sub-penny level. For example, a tax that results in something costing $2.057 becomes $2.06. Why not do it on the super-penny level?

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  2. Justin James says:

    @Iljitsch (#2) -

    They price things that way because the .99 looks much cheaper to the customer than the .00. There are studies showing that it can affect sales numbers.

    J.Ja

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  3. Robert says:

    @Sean:

    An independent coffee shop I frequented almost 15 years ago did that; all prices were listed “including all applicable taxes”, and were (I believe) multiples of a quarter.

    The problem comes up where chains (and, especially, national chains) come up against tax rates that can vary within a zip code. It’s not terribly common, but sales tax can differ at opposite ends of town!

    Taxes definitely differ from state to state, so national chains can’t really run national ad campaigns with “tax included” prices without adversely affecting either their competitiveness (in low-tax areas) or profitability (in high-tax areas). Nor can they tweak prices so that the total at the register will always be a multiple of 5c. It really does only work at the individual-store level.

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  4. Greg says:

    There were a couple of burger stands in Provo, Utah that adjusted their prices to come out as full quarters after-tax.

    The quickest way to kill the penny would be to abandon $x.99 items.

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  5. bg says:

    In NZ, we first eliminated the penny, rounding to the nearest 5, then we got rid of the nickel, rounding to the nearest 10. Much faster and less change to carry around.

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  6. Joe says:

    I certainly agree with Sean (#3). Set the prices such that the after-tax prices are a multiple of 0.05. The store in my high-rise office building charges $1.47 for a bottle of Coke, which comes out to $1.65 after Chicago taxes (yay, highest sales tax in the nation…)

    Interestingly enough, when the soda tax was implemented (another percent or so for soda), the price remained the same, but they actually printed $1.47 on the bottle – before that they were simply running European-style, tax included in listed price. Nice to see the retailer eat the two cents per bottle – keeps me coming back instead of picking it up on my way to work at Walgreens (who did raise the price by 0.02 by passing the tax on to us).

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  7. Paul says:

    @Sean – No this isn’t possible because of rounding. You could make it so that each item rounds nicely, but not all combinations. For example, if you had 10% tax, tax on a 9 cent item would be 1 cent, which would be good. But tax on 6 of them (54 cents) would be 5 cents, giving a total of 59 cents.

    @Iljitsch – If you are so concerned about getting every cent back from your change, why doesn’t it bother you that under your plan everything would be a cent more? Under the current pricing, if you buy 5+ items, you pay at least 5 cents less.

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  8. Kevin says:

    @Sean – because most chains have corporate set the prices, and they advertise those prices in the window. And since every city/county/state has different tax rates, pre-adjusting for every store would be a nightmare.

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