FRACTIONAL PRICING Público Deposited
The E-Sylum: Volume 7, Number 14, April 4, 2004, Article 23
FRACTIONAL PRICING
Regarding last week's items about pricing gasoline in fractions
of the smallest coin, Martin Purdy writes: "The point, of course,
is that you *can* pay the exact amount if you buy ten gallons.
A similar situation exists in countries that have done away with
their smallest coins (e.g. New Zealand and Australia), which
still have pricing down to the last cent for most commodities,
even though the smallest coin in use is now 5c. There will be
plenty of goods at my local supermarket for $1.99, but I have
to pay $2.00 for them if paying cash. Debit cards or credit
cards will have the exact sum deducted. If I buy more than
just that one item, then the exact amount goes on the bill, and
it's only the final total that is rounded up or down as appropriate.
It averages out, and I certainly don't intend to lose too much
sleep over it."Dick Johnson writes: "In response to last week's comments
on the use of fractional cents, it could be said that the larger
the contract the more decimal places in the unit price. I had
recalled a contract for 2.2 million World War II Victory
Medals that Medallic Art Company received from the
government in 1946. I thought it had four or more decimal
places as fractions of a dollar, thus making it fractions of a
cent as well.When I found my photocopy of the acknowledgment of that
order, however, the unit price was only $.459 each, which
makes it like the price of gasoline, always quoted in nine-tenths
of a cent. However each 1/10 of a cent would have added
$2,200 to the total price. A quote in 1/100ths of a cent would
have added $220 to the total, each 1/1000th of a cent more
would have added only $22. So you see there are diminishing
returns on carrying the decimal price any further.Incidentally, the agreement was that Medallic Art Co would
deliver 440,000 medals at the end of the month for each of five
successive months, August through December of 1946. That
order sent the little plant on the East Side of Manhattan into
three-shift overtime. They also rented nearby resident
apartments, set up worktables and hired women to sew on
the ribbon drapes and package the medals. Incredibly, they
met all those delivery dates!"- 2004-04-04
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