Pricing formula at gasoline stations doesn't make cents
Hyundai Motor America announced the other day that it would allow people to return their new cars if they lost their jobs. This was an impressive -- and all-too-rare -- example of a company getting that its first allegiance should be to its customers, especially during rough times.
More on that in a moment. But first, let's look at a related industry: gas stations, which are an example of businesses that don't get treating their customers with respect.
Unlike Hyundai's we're-all-in-this-together approach, gas stations go out of their way to mislead people with an archaic pricing system that serves no purpose but to make drivers believe they're getting a better deal at the pump than they are.
Or maybe you think it makes perfect sense for people to be charged nine-tenths of a penny per gallon more than the whole numbers more prominently displayed on gas-station signs.
"Now that you mention it, it doesn't seem fair," said Odette Nazarian, a 36-year-old accountant, as she filled her Lexus recently at a Westside gas station with premium gas costing $2.17 9/10 a gallon.
"I suppose they round off the price," she said. "But I doubt they ever round down. This probably adds up to a ton of money for the gas stations over the years."
Like me, you've probably paid an additional nine-tenths of a penny per gallon your entire driving life. And like me, you've probably never really questioned the practice.
But ask yourself: When you see gas selling for, say, $1.89 9/10 , does that register in your mind as $1.89 or $1.90?
Exactly.
"It comes down to marketing," said Jeff Lenard, a spokesman for the National Assn. of Convenience Stores, which represents about 40% of the 115,000 convenience stores nationwide that pump gas.
"When you go to a gas station, $2.29 9/10 sounds cheaper than $2.30. That's why everyone does it."
He's right, of course. Retailers have long known that a product sold for $9.99 is perceived by shoppers as a better deal than an identical product priced at $10.
But the addition of nine-tenths of a cent only muddies the water (as is the case at 99 Cents Only Stores, which now charge a top price of 99.99 cents). This is an amount, after all, for which no unit of currency exists. Consumers simply can't pay the advertised price. Some sort of rounding will always be required.
