The world does not need a five pound coin. It doesn’t need a commemorative silver guinea or a special three pound coin with the queen’s head on it.
What the world needs is a 99p coin. (If you’re reading this blog in some other economic zone substitute pounds and pence with your own currency.)
Like rain, flies and politicians, an enduring feature of my life, and probably yours too, is the insistence retailers place on prices ending in 99. My conclusion is that it’s a psychological thing. 99p doesn’t sound as expensive as £1, but do retailers really think we’re fooled when they price things at £899.99?
There’s no tax advantage to the retailer. They don’t pay tax on individual items, rounding the price down to the nearest quid.
There’s no manufacturer of one pence pieces lobbying business groups to maintain the practice and the demand for one pence pieces.
Do retailers hope customers will say ‘keep the change, it’s only a penny?’ That’s a lot of kept pennies in a year. My advice is to stay there until they cough up the readies and give you the right change. If they ‘haven’t got any ones’ bloody well stand there and inconvenience them. Pressure from the market would soon make them see sense.
Some companies, like the fashion store Next, do round off to the nearest pound. They obviously realise that no one will waste time trying to choose between something priced at £10 and something priced at £9.99.
It’s such a ubiquitous practice that even I do it. My ebooks are priced at $2.99 in America because I know anyone dithering over price will be put off if it says $3!! (After writing this blog post I’m going to go and change my prices everywhere. . . .)
There is a school of thought that says rounded off numbers look arbitrary, not thought through, and business people don’t want anyone thinking they don’t know what they’re doing. £7.99 looks like a lot of thought has gone into it, with its superfluous decimal point and additional digits.
You might think it’s trivial, but Henrik Bergman at the Oslo School of Environmental Studies* recently researched the additional time and resources needed for computers to calculate all the 99s. In a single trading year, the computing power needed contributed 0.75% of atmospheric carbon dioxide. (Imagine if the figure had been 0.99%.)
Computers would run quicker if the calculations were simpler, simple people could add up a shopping list quicker, we’d need less metal for all the one pence pieces. And we wouldn’t keep finding old Czech coins in our change that get rejected by the Coinstar machines.
In a cashless society it might not matter any more. The poor have no choice but to pay up, and the rich can afford to forfeit their pennies. In a cashless society all the unused pennies could be given to small children to play on the slot machines at Blackpool. That was the only benefit of 99p pricing when I was young: pennies being recycled for the waterfall machine and the penny tray at Mrs Lowe’s toffee shop on the corner.
But next time you see a BMW in a British showroom priced at £34 799.99 tell them to round it up to 35 grand and throw in some floor mats. We’re not fooled by it any more.
* I made that bit up in the hope it would be one of those fake statistics that goes viral.