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]


This initiative has been running in many South African supermarkets for a number of years now. But the difference is that they ALWAYS round the total down - so the customer always benefits.

So a purchase totalling 5.44 will be billed at 5.40.

This initiative is used regardless of the payment method used, cash, credit card etc.

Iljitsch van Beijnum

This has been common practice in the Netherlands for a long time. Before the euro, cents were no longer issued for many years. With the euro, the cent came back but stores returned to their old ways after a couple of years. I don't understand this because cent coins are tiny and don't get in the way, it's those huge two euro coins that are a drag.

I'm not paying 2.25 if the bill says 2.23. If stores don't want to deal with these small coins, why are they still pricing their wares as 0.99 rather and 1.00? (In Europe the tax is included in the listed prices so there are no issues with the tax making for awkward amounts.)


What I'd like to know is why can't Dunkin Donuts (or any other retailer) just fiddle with the before-tax prices on their menu to ensure that every after tax, every transaction would wind up being divisible by 5 cents? Or 10 cents? Or 25? Does anyone do this already?


This is great. I hope others follow suit, I don't mind the 2 - 3 pennies either extra or less that I get on cash purchases... better than carrying around pennies in your pocket.

Daniel McLeod


Yes, AMC does this. Go into any of their theaters and look at the prices of all the items on their menus.


Just pay electronically, othewise I'll take the full change unless the rounding works to my benefit.


@3 Perhaps it's because not only is it an issue to give out pennies but it takes a long time to get them too. Ran into that issue today at a store where a little old lady gave exact change. Took her 3-4 mins to find all the right coins, of which at least 10-15 cents of that was in pennies. It was maddening.


In Australia, where 1 and 2 cent pieces were done away with some years back, the total is rounded down (much like the S.A. and Netherlands examples). The tax is also pre-calculated so you know what the total is (e.g. if an item is $1.12, this will be charged at $1.10 which automatically includes the 10% tax).

Another David

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?

Justin James

@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.




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.


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.


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.


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).


@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.


@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.


"For any customer who still would like their pennies, please just ask the cashier and we would be happy to accommodate you."

First, in principle, I like the idea of rounding to the nearest nickle.

Second the Dunkin' Donuts' store revenue will increase. I think there are a lot of people who don't like dealing with pennies nowadays.

The question is, if the 'rounding' is not in the customer's favor, how many would ask for the 1 or 2 pennies? I think this would be an interesting behavioral economic experiment. My guess is that if the person was alone and/or no one else in the store, more people would ask for the pennies. If the person was with other people, fewer would ask.

Maybe you should study this and include in 'Superduperfreakeonomics'?

Ian Kemmish

Wouldn't a more "nudgy" solution be a sign that says, "unless otherwise instructed, we donate every penny in your change to charity"?


@Paul, you CAN do it if you set the prices to fractions of pennies. Then you can avoid the rounding issue. Now the only problem is floating point arithmetic.


Did no one notice that the store isn't rounding the prices up, its rounding your change up. This is always to the benefit of the customer.