Penny For Your Thoughts (1 Viewer)

[cafink]

You're still missing the point. You are assuming that consumers would buy just as much of a product at $2.00 as they would at $1.01. In almost all cases, they certainly would not. Because stores would sell fewer items, they're about as likely to lose money on that item as they are to gain it. If they round all of their prices up indiscriminately, with no concern for the effect on sales, they are almost certain to lose money on the proposition.

 

[Yee-Ming]

As I understand it, the Aussies and Kiwis have already 'outlawed' their penny, i.e. in all cash transactions the final bill is rounded to the nearest 5 cents (up or down as applicable), and the 1-cent coin no longer exists.

Even in Singapore, 1-cent coins are no longer in production, although they still circulate; in due course they will no doubt be phased out entirely, probably along the same lines as Down Under. In any case, since it's around S$2.7 to the pound, our one cent is worth less than half a UK penny anyway...

Some supermarkets already voluntarily practice rounding down to the nearest 5 cents on the final bill for cash transactions, to do away with handling 1-cent coins entirely, and most places that deal entirely in cash transactions (small stores, food courts, hawkers etc) never charge in anything other than to the nearest 5 cents (indeed, more commonly to the nearest 10 cents).