Rounding is generally done only for cash transactions (“cash rounding”). For all other payment types, the unrounded price is used.
I wrote code for this a long time ago when cash was still a major form of payment in a country that got rid of sub 0.05 coins. There were various rules to try to ensure neither the seller or buyer always benefited.
I come from a country that has rounding. The unrounded price always shown on the shelf, and is what you pay unless it's cash.
If you do pay cash, it's not the item's price that's rounded, it's the total. That's important because the amount being rounded is essentially random, so the shop can't chose a price that would be rounded in one direction. In a $10 purchase using 0.05 rounding the maximum difference amounts to 0.4%, but is usually 0.2% or less. It's so small it could be used as an advertising gimmick, and consequently some retailers chose to always round down. The remainder went with rounding to the nearest with the lowest value winning in a tie.
I do not remember a single one always rounding up. That would be a customer relations disaster.
If you're rounding to 0.05, you don't even need to break ties - any price ending in an integer number of cents can be rounded fairly to the nearest 0.05, e.g.
1.00 -> already round
1.01, 1.02 -> round down to 1.00
1.03, 1.04 -> round up to 1.05
1.05 -> already round
1.06, 1.07 -> round down to 1.05
1.08, 1.09 -> round up to 1.10
1.10 -> already round
I think GP is saying that, when paying with cash, because there is no option for sub-5c prices, the only option is to round to the nearest 5c.
If price is $1.03 then for cash customers, the price has to become $1.05. If paying debit or credit card then the price can stay $1.03 because there is no cost for computing pennies.
The optics of the change is that it does cost more for the consumer if paying cash and if you have a society that wants to push more people to digital transactions then this is how you start to do it along with the optics and ramifications that go with it.
The general practice is to round up or down to the nearest unit when paying cash. That means if you only have nickels, you either round up or down to the nearest 5 cents. It should average out. Absolutely no one is getting rich off of this.
The entire world is already moving to digital currencies and even if you do everything with cash, rounding up and down to the nearest nickel - per total transaction is not going to make a dent in anyone’s budget - even the poorest people.
If you make 4 cash transactions a day and your total transactions are always rounded up, you’re going to be out of $3.60 a month and that’s the worse case.
> No the price will become 1.05 and when customer buys 2 it will be 2.10 not 2.05
That's quite literaly against the "various rules to try to ensure neither the seller or buyer always benefited" that the previous commenter was talking about writing software to handle.
No country that has cash rounding rules would allow 2*1.03 to be charged $2.10.
(Unless you mean: the price of a single item is changed to $1.05, in which case sure; that's the business's perogative to raise prices but it's not taking advantage of the rounding system)
Since sales taxes are added at the time of purchase in North America, none of that ends up mattering because the randomness of someone's shopping cart plus the percentage of sales tax makes it impossible to price your inventory in such a way as to consistently benefit the retailer.
Worth mentioning that despite not having a one-cent denomination, products are still priced in cents - e.g. in Canada you still price something at $2.79 even though we have no pennies. It's only at the payment step, when cash is being used, that anything is rounded off.
I mean, retailers could certainly increase their shelf prices, but if they were going to do that they would do so anyway, and the $X.99 pricing pattern exists for a reason so there's not really anywhere to increase those prices by some small amount that wouldn't put people off anywa.
I recall some major US chain (TJ Maxx? JC Penney? Target? Something?) that decided to start pitching some kind of 'honest pricing' scheme, where all their stuff was just rounded up, so instead of $24.99 it would be priced at $25 flat.
A noble goal, but it apparently backfired on them spectacularly because of the same reason why retailers did that in the first place.
It was JC Penney, however they went beyond merely rounding prices. They ditched sales and coupons, which are unfortunately very popular, and that is often cited as the reason the "fair and square" plan failed.
Did they replace the sales and coupons with simply lower prices across the board? Because that would make it more attractive to buy there. If not, it's a price increase.
Yes, but the lower prices across the board were close to the average selling price before, not the best price you used to be able to get using a coupon for an item on sale. Therefore deal hunters no longer wanted to shop there. The price-insensitive folks still did, but they were the ones who used to pay full price and subsidize the deal hunters, and now they were getting a lower price than before. Thus it was a money losing strategy for the company.
I wrote code for this a long time ago when cash was still a major form of payment in a country that got rid of sub 0.05 coins. There were various rules to try to ensure neither the seller or buyer always benefited.
https://en.m.wikipedia.org/wiki/Cash_rounding