Penny in Danger

Australia did away with the equivalent to the penny years ago and I must say, "I loved it!" They did the rounding as well and I never felt like I was cheated in the 4 ½ months I was in the country. Sometimes the rounding worked in my favor, sometimes not. Pennies have virtually no value and I imagine all of us have hundreds, if not thousands, of these annoying little things lying around.

As for your argument of, "Well, what would stop merchants from strategically pricing the merchandise to round in their favor?” it sounds good in theory but is not grounded in retail reality. Why do things cost $19.95, $49.95, or $99.99? It is done that way for psychological reasons. The consumer is ok with paying $19.95 for a product but price it at $20 and you WILL see a decrease in sales. Read a "Retail Management" book that can be obtained at most colleges to see study after study that backs this up.

Also from the "Obvious Logic" department, suppose a retailer does price his product at $1.01. You said that with the rounding, the retailer "would then gain an extra $0.02 for every single purchase." That is only true on every SINGLE purchase. If I buy 2 widgets priced at $1.01 each, the purchase price would be $2.02 and the tax would be $0.14 for a total price would be $2.16. With rounding, he would lose $0.01 on every duel purchase.

I understand you may have a childhood fondness of the penny but your argument for keeping isn’t very valuable.

True. This argument works for widgets. Buy 2 of them and then the consumer would come out ahead. But let's step into items of reality such as a McDonalds Value Meal.

Say that the marketing research out there says most transactions at McDonalds are made by a single person. And most people only buy one value meal at a time. So in areas with a $0.07 sales tax, it would be McD's benefit to price the BigMac Value Meal at $3.95 (totaling $4.23 that would be rounded to $4.25).

Apparantly this is the "not so obvious logic" in this case. I don't mind explaining it though. Of coarse more research could be done, there's tons of products out there. Who knows - after evaluating the research the merchants/companies may realize that there is no way to strategically price their items to gain substatial amount through rounding.

Any how, I'm still for keeping the penny. Think of the children. Won't somebody please think of the children!!!!

...because if we didn't, after a few decades the same people would begin complaining about the nickel....then the dime.....then the quarter....don't forget, we once had a 1/2 penny.