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0 pointsrkomorn4mo ago0 comments

Call me cynical but I don't at all believe the issue is tax jurisdictions or anything related to complexity.

It's that it's easier to show a price of $0.99 and have the consumer pay $1.08 (for example) than either show a price of $1.08 and have the consumer pay it, or show a price of $0.99 and have the consumer pay $0.99 and "lose" 7 cents (because your price was $0.92 before taxes).

Pre-tax price is lower and sells better than post-tax price.

0 comments

jedberg4mo ago

That wouldn't apply if everyone included tax in their prices. In this case, the item would just be $1.10.

If the business really thinks they will lose money by pricing over a dollar, then yes, they would have to take that hit. But they are already taking that hit if the "real value" is $1.02 for example.

It's just a price/demand curve. They would simply have to optimize it differently.

rkomornOP4mo ago

There's a reason everything is priced at some variety of .99, 99.99, 999.99, etc: it sells better than 1.08, 108, 1080, etc.

My point is getting the consumer to eat the sales tax on top is just a wise trick by US businesses, and nothing to do with complexity.

jedberg4mo ago

That's been debunked. Every consumer just auto-rounds in their head. Companies keep doing it because of tradition more than anything else.

It is a wise trick, and exactly the job of government -- to prevent the public from getting tricked by businesses.

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0 pointsrkomorn4mo ago0 comments

Call me cynical but I don't at all believe the issue is tax jurisdictions or anything related to complexity.

Pre-tax price is lower and sells better than post-tax price.

0 comments

jedberg4mo ago

That wouldn't apply if everyone included tax in their prices. In this case, the item would just be $1.10.

It's just a price/demand curve. They would simply have to optimize it differently.

rkomornOP4mo ago

There's a reason everything is priced at some variety of .99, 99.99, 999.99, etc: it sells better than 1.08, 108, 1080, etc.

My point is getting the consumer to eat the sales tax on top is just a wise trick by US businesses, and nothing to do with complexity.

jedberg4mo ago

That's been debunked. Every consumer just auto-rounds in their head. Companies keep doing it because of tradition more than anything else.

It is a wise trick, and exactly the job of government -- to prevent the public from getting tricked by businesses.

1 more reply

j / k navigate · click thread line to collapse