Beginning of the end for prices ending in .99?

There’s a new pricing experiment going on at some British retailers, which may, if it works, be headed here as well. It’s called the “round pound,” and it means dropping .99p prices and simply rounding up to an even pound. I first read about it in the Financial Times, and it’s also been covered by the BBC, among others.

Though most of the action involves grocery and drug store items with new, £1 price tags, the trend also seems to be spreading to higher-priced goods, with £1.99 becoming £2, and so forth.

There appear to be a number of reasons behind the switch, a major one being that consumers are no longer fooled into thinking that £1.99, for example, is really significantly less than £2. The higher price may actually seem more honest.

Aside from our ubiquitous dollar stores, has anybody seen this rounding phenomenon in mainstream U.S. retailers yet?  Maybe all that’s missing is a catchy name, like “round pound.” Let’s see... what rhymes with dollar? --Greg Daugherty

Greg writes the “Retirement Guy” column each month in the Consumer Reports Money Adviser newsletter.

Comments

[steve]

call it the "honest buck"

[Kevin]

The only place I remember noticing this is at some restaurants that prefer to just list a whole number like "12" after a menu item instead of $11.95.

It would be a welcome simplification if everyone did this... and we eliminated the penny :-)

[thomas]

can we just INCLUDE tax in the price AND go to whole numbers? Please?

[ed]

I'd call it the full dollar. Just yesterday I saw an infomercial for some cell-phone thing with a price of "Two Payments of Just $10". I noticed the amount was a full dollar and started to wonder if $10 is the new price point of "Small enough money, I can just get it without feeling guilty."

[David Schwartz]

I would love to see stores go to whole number pricing, but including tax in the price is a horrible idea. The merchant is not charging the tax and there is no reason they should have to advertise it to the customer as well. Plus, it would make it much harder to fairly compare taxable and non-taxable transactions. You don't see web sites including shipping in the prices they advertise, do you?

[bferg]

WalMart has actually been doing this in some stores/parts of the store for a while now. Basically they believe the same thing: consumers now like the simple value of a $1 item.

[Scott]

I was in Europe last summer. Most (probably 95%) of the vendors included the tax in their price and their prices were generally whole numbers or easy fractions. $1, $1.50, $1.30, $1.80 (using a $ instead of a Euro sign). No pennies needed. It was very easy.

[Madog]

I always tell people the rounded up dollar amount when they ask about a product. A year ago or so, some lady responded with, "You mean $9.99? Don't try to sell me on that extra penny!". She was laughing in the process but I still had the feeling she was serous and felt somehow I was trying to rip her off. Needless to say I wanted to smack some reality into her.

[Carl]

Does this mean that maybe gas stations will stop using nine tenths of a cent on the end of their prices as well? I've been waiting for that one since I got my license (if not longer). I saw one station in Indiana about 10 years ago that advertised in whole cents. What are those anyway? Mils?

[Tigra 07]

I haven't seen the "round pound" anywhere except asda so far in the UK
I expected more companies to up their prices by the 1p (they're usually good at overcharging)

[Lee W.]

Even the author is confused by using .99p (point 99 pence) instead of 99p (99 pence). Also don't even consider including sales tax (like they do in Europe as VAT (value added tax)) as not all states have sales tax or tax every item.