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!"

  Wayne Homren, Editor

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