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private joker
09-07-2005, 06:36 AM
How come gasoline is the only product that is priced to the tenth of a cent? Tacos are not $1.99 and 9/10. Car washes are not $6.99 9/10. A large Pepsi is not $1.50 9/10. Why just gasoline? And really, whom do they think they are kidding?

I wonder if I'll get any serious answers to this from economics students or merchants.

Jack of Arcades
09-07-2005, 06:42 AM
Think of it as the vig on tourney, IE 2.89+.009. That's how it essentially started, with the 9/10th or 5/10th of a cent tacked on because that was the tax imposed on gas sold.

MCS
09-07-2005, 07:43 AM
Here are two ideas I thought up.

Because almost no one buys gasoline one gallon at a time, they can get a few extra cents out of each customer. So the 9/10 will actually matter.

Also, the calculation of purchase cost is automated, so it's not more complicated to have extra tenths of cents. It would be harder at a grocery store where you'd have to have nonstandard cash registers.

canis582
09-07-2005, 08:17 AM
I dont believe they give you the extra penny back when you get to your 10th gallon. Imagine how much extra money they have made over the past 20 years.

I forget where I was, but I swear I saw one with x.xx and 8/10s.

Jersey Nick
09-07-2005, 08:21 AM
[ QUOTE ]
And really, whom do they think they are kidding?

[/ QUOTE ]

You can fool some people all the time.

I'm entirely too lazy to google this properly for evidence, but there is the issue of consumer perception at play here. An item priced at $9.99 is more attractive to the average consumer than an item priced at $10.00, even though the savings is only one penny.

Imagine a gallon of gas priced at $3.509. Most folks don't round up in their heads and think of it as $3.51, but 10 gallons = $35.09 or a penny less than $35.10.

Next time you have a passenger in the car, ask them to notice the price of regular gas as you pass the sign. I would wager that the vast majority of people don't round up that penny when they see it.

TheIrishThug
09-07-2005, 08:49 AM
nobody rounds up when they r just checking the prices because all the gas stations do it. so it doesn't make a diference if u compare 3.299 to 3.219 or 3.30 to 3.22.

Shajen
09-07-2005, 09:24 AM
[ QUOTE ]
nobody rounds up when they r just checking the prices because all the gas stations do it. so it doesn't make a diference if u compare 3.299 to 3.219 or 3.30 to 3.22.

[/ QUOTE ]

I round up every time.

I also always get an even amount of gas. IE, $42.00 instead of 41.63

MrTrik
09-07-2005, 11:16 AM
[ QUOTE ]

Because almost no one buys gasoline one gallon at a time, they can get a few extra cents out of each customer. So the 9/10 will actually matter.


[/ QUOTE ]

They are not extra cents. The price is clearly stated. It was put correctly later in the thread by Jersey Guy.

[ QUOTE ]

Imagine a gallon of gas priced at $3.509. Most folks don't round up in their heads and think of it as $3.51, but 10 gallons = $35.09 or a penny less than $35.10.


[/ QUOTE ]

gobboboy
09-07-2005, 11:39 AM
[ QUOTE ]
I dont believe they give you the extra penny back when you get to your 10th gallon. Imagine how much extra money they have made over the past 20 years.

I forget where I was, but I swear I saw one with x.xx and 8/10s.

[/ QUOTE ]

Donnie's discount gas!

Jersey Nick
09-07-2005, 12:29 PM
[ QUOTE ]
nobody rounds up when they r just checking the prices because all the gas stations do it. so it doesn't make a diference if u compare 3.299 to 3.219 or 3.30 to 3.22.

[/ QUOTE ]
No, the gas stations do not round up, at least not in the dozen or so states where I've bought gas.

I have noticed that most places actually describe the price of a gallon using decimals for the pennies and fractions for the nine tenths of a cent. Instead of seeing $3.509 per gallon, you will see $3.50 9/10 per gallon. It is a visual trick becuase most people don't "see" the fraction as part of the price.

benfranklin
09-07-2005, 01:11 PM
[ QUOTE ]

I'm entirely too lazy to google this properly for evidence, but there is the issue of consumer perception at play here. An item priced at $9.99 is more attractive to the average consumer than an item priced at $10.00, even though the savings is only one penny.



[/ QUOTE ]

This is the reason. It's all psychology. People tend to concentrate on the initial digits, and not on the very end of the number.

The practice with gas dates from back in the Stone Age when I started driving. If you were starting off pricing gas today, you would never think of using 9/10 of a cent. If you were going to charge about $3, you would probably just price it at $2.99 instead of $3.00.

But back when gas was cheap, 9/10 of a cent was relatively large. Charging 19.9 cents a gallon instead of 19 cents added up to a significant amount over the long run.

P.S. More ancient history: Back then, you couldn't pump your own gas. An attendent came out and pumped it, took your money, and gave you change. Rich people would say, "Fill'er up." Starving students such as myself would say, "Give me a dollar's worth."

bravos1
09-07-2005, 01:18 PM
[ QUOTE ]
I also always get an even amount of gas. IE, $42.00 instead of 41.63

[/ QUOTE ]

I also have a friend who does this but can not explain to me why... he just does it. Can you tell me why you need to pump till an even number? If your paying cash, then it makes sense to me that you want to pump until some even-ness to reduce change, but most people use credit/debit cards and it doesn't make sense to me??? /images/graemlins/confused.gif

Shajen
09-07-2005, 01:33 PM
I do it because it's easier when I record all my transactions in MS Money. I usually wait til I have a shitload of them and record them all at once. It's easier to enter 42.00 than 42.79.

I also round every tip to the nearest whole dollar.

A 33.21 tab becomes $40 with tip.

I've always done it this way. Guess it's just the anal rententive in me.

stabn
09-07-2005, 01:38 PM
[ QUOTE ]

P.S. More ancient history: Back then, you couldn't pump your own gas. An attendent came out and pumped it, took your money, and gave you change. Rich people would say, "Fill'er up." Starving students such as myself would say, "Give me a dollar's worth."


[/ QUOTE ]

Welcome to Oregon. Whenever i go to portland i always fillup in vancouver just so i don't have to deal with that [censored].

bravos1
09-07-2005, 01:40 PM
[ QUOTE ]
I do it because it's easier when I record all my transactions in MS Money. I usually wait til I have a shitload of them and record them all at once. It's easier to enter 42.00 than 42.79.

I also round every tip to the nearest whole dollar.

A 33.21 tab becomes $40 with tip.

I've always done it this way. Guess it's just the anal rententive in me.

[/ QUOTE ]

OK..thx.. It's funny though because I always try to tip in whole dollar amounts. I guess I don't want the person to be walking around w/ $4 in change... but that wouldn't really happen anyways.. I guess LOL

bwana devil
09-07-2005, 01:58 PM
on an unrealed note but it made me think of it, i remember as a kid going to a diner and i was just beginning to understand money and fractions.

on the menu everything was at least a dollar except milk. the milk was listed as .95c w/ the c being cents. i kept asking my parents if i could order a glass of milk and give the lady a penny and ask for my change. /images/graemlins/grin.gif

i was an annoying kid.

Patrick del Poker Grande
09-07-2005, 02:03 PM
[ QUOTE ]
[ QUOTE ]

P.S. More ancient history: Back then, you couldn't pump your own gas. An attendent came out and pumped it, took your money, and gave you change. Rich people would say, "Fill'er up." Starving students such as myself would say, "Give me a dollar's worth."


[/ QUOTE ]

Welcome to Oregon. Whenever i go to portland i always fillup in vancouver just so i don't have to deal with that [censored].

[/ QUOTE ]
Isn't there somewhere closer than Vancouver to fill up?

Ringo_Mojo
09-07-2005, 06:13 PM
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]

P.S. More ancient history: Back then, you couldn't pump your own gas. An attendent came out and pumped it, took your money, and gave you change. Rich people would say, "Fill'er up." Starving students such as myself would say, "Give me a dollar's worth."


[/ QUOTE ]

Welcome to Oregon. Whenever i go to portland i always fillup in vancouver just so i don't have to deal with that [censored].

[/ QUOTE ]
Isn't there somewhere closer than Vancouver to fill up?

[/ QUOTE ]

Vancouver WASHINGTON is just across the border from Portland.

And I used to do the same thing, last thing i want is some three toothed yokel pawing at my car.

WLVRYN
09-07-2005, 11:39 PM
[quote

I also always get an even amount of gas. IE, $42.00 instead of 41.63

[/ QUOTE ]

I try to do that, but I always end up with the classic oversqueeze.

youtalkfunny
09-09-2005, 04:00 AM
A always thought the 9/10 thing was related to taxes.

Dr. StrangeloveX
09-09-2005, 05:42 AM
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]

P.S. More ancient history: Back then, you couldn't pump your own gas. An attendent came out and pumped it, took your money, and gave you change. Rich people would say, "Fill'er up." Starving students such as myself would say, "Give me a dollar's worth."


[/ QUOTE ]

Welcome to Oregon. Whenever i go to portland i always fillup in vancouver just so i don't have to deal with that [censored].

[/ QUOTE ]
Isn't there somewhere closer than Vancouver to fill up?

[/ QUOTE ]

Vancouver WASHINGTON is just across the border from Portland.

And I used to do the same thing, last thing i want is some three toothed yokel pawing at my car.

[/ QUOTE ]


this makes you a tard because the cheapest gas (by quite a significant margin) in the area is at the flying j in troutdale (Oregon).

I also would rather pump my own gas, but if the difference between me doing it and somebody else doing it is going to literally be dollars, I have no problem letting them do it.

It's also kind of nice to have someone else do it when it's 20 degrees out and the wind is blowing forty miles an hour.

MCS
09-13-2005, 12:41 AM
[ QUOTE ]
They are not extra cents. The price is clearly stated. It was put correctly later in the thread by Jersey Guy.

[/ QUOTE ]

That's pretty nitpicking. I thought it was obvious what I meant, but perhaps not.

Although the more I think about it, the less I think this matters. Because if you set prices in whole cents, is there anyone who would go significantly out of their way to buy gas for $2.86 instead of $2.87?

P.S. Since we're being precise, it's Jersey Nick, not Jersey Guy. /images/graemlins/tongue.gif And I acknoweledge that my earlier grammar ("pretty nitpicking") is imperfect.

private joker
09-13-2005, 12:50 AM
[ QUOTE ]


Although the more I think about it, the less I think this matters. Because if you set prices in whole cents, is there anyone who would go significantly out of their way to buy gas for $2.86 instead of $2.87?


[/ QUOTE ]

That's what I'm saying. People are talking about the "psychology of pricing," given that people don't round up. First of all, Duh. The reason sodas are $1.99 and not $2.00 is because who wants to pay 2 bucks for a Pepsi when they can get one for a dollar and change.

But that's not the issue. If you want to use that psychology, then charge $2.59 a gallon instead of $2.60. Maybe when gas was 26 cents, the 26.9 sounded better than 27. But these days it's totally insignificant and stupid.

Also, the point of the 9-price psychology is to get consumers to buy things they might not ordinarily purchase if the price were higher. "I'm thirsty, but I don't want to spend 2 bucks on a Pepsi -- oh cool! Here's one for just $1.99, I think I'll get it," etc. That's not the case with gas. People who go to a gas station aren't wondering if maybe they should splurge and fuel up their car. They have to in order to reach their destination. You're not going to lose business by saying an even $2.67 as opposed to $2.66 and 9/10. This is *especially* the case because *every* gas station does it. So it can't even be a matter of competition in the marketplace.

It's dumb and I still don't understand it. The only reasonable argument thus far in the thread is the tax theory, but I'd like to hear more concrete evidence of how gasoline is taxed before I believe it.

ChipWrecked
09-13-2005, 03:02 AM
Gas Taxes (http://www.energy.ca.gov/gasoline/statistics/gas_taxes_by_state_2002.html)

private joker
09-13-2005, 03:10 AM
[ QUOTE ]
Gas Taxes (http://www.energy.ca.gov/gasoline/statistics/gas_taxes_by_state_2002.html)

[/ QUOTE ]

OK, given that most of these are listen in cents or random tenths like .4, then that makes the specific .9 even dumber. I've concluded that the 9/10 in gasoline prices is moronic.

Rick Nebiolo
09-13-2005, 03:30 AM
[ QUOTE ]
How come gasoline is the only product that is priced to the tenth of a cent? Tacos are not $1.99 and 9/10. Car washes are not $6.99 9/10. A large Pepsi is not $1.50 9/10. Why just gasoline? And really, whom do they think they are kidding?

[/ QUOTE ]

It's because long ago they manufactured a lot more of those stickup signs with nine painted on it.

~ Rick

Bulldog
09-13-2005, 10:21 AM
Say I'm running a busy gas station selling 8,000 gallons per day, at a current price of $2.799. I could decide to stop the .009 silliness and change my price. I'm not going to change it to $2.80, because the $2.799 across the street and the $2.749 a few miles away all of a sudden look a lot better. So I've gotta change it to $2.79. Now I've got a lower price than the $2.799 across the street, but almost nobody even recognizes that, so I see no bump in my volume sold.

Meanwhile, I'm selling 8,000 gallons per day for $72 less than I was yesterday. Even if I profit $0.40/gallon (probably a high guess), I'd have to sell 180 more gallons (or about 15 more fill-ups) to break even. Bad business decision for me, huh? /images/graemlins/frown.gif

I agree that the $0.009 is silly, but I don't see how it is ever going to change.