Comment by devilbunny | Hacker News Reader

Comment by devilbunny | Hacker News Reader

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Relatedly, I know of an excellent local bakery that only takes cash or check. A regular birthday cake of generous-but-not-huge size is around $60, and it's worth it.

But when you go in to pay, the price after sales tax ends up being something like $57.63 (or whatever, you get the idea). So for checks, not an issue, but for cash... they now have to keep loads of coins on hand, lots of small bills, and presumably reload those often.

Either raise or lower your price. Someone buying a $57.63 cake isn't going to balk at paying an extra $2.37. And if you make it $60 even, after tax, you don't have to keep anything but $10 and $20 bills in stock for your best-selling cake, because you'll get a mix of bills in, but the only way you give change will be from a $100 bill (2 x $20) or a $50 and a $20 (1 x $10). You will still get other bills in sometimes, and some coins, and of course they do sell other sizes (but they don't do a lot of small-scale things like cupcakes). Most sales require an order in advance.

Just cutting down on all that cash handling would be advantageous (and that's why one of the owners is always at the register).

The reason cash sucks like this on the US is because of the tradition it has of listing prices before taxes. In countries that list prices after taxes, the cake would be priced in a way so that the final number would be something round like 60. (Although they would likely do 59.99 or 59.95).

Merchants are able to price things to result in exact numbers, and some do especially if they sell individual items.

However, many customers (1) throw odd change in the tip jar, and (2) an exact amount might discourage add-on purchases.

In this case, an exact amount would certainly result in zero tips. The customer would need appropriate bills and wonder how much would be appropriate (since 15% of $60 is too much).

They do almost no ready-to-buy business; if you didn’t order it, it’s probably not going to be there. And few people are going to buy multiple cakes at once. And they don’t have a tip jar. Order cake three days ahead, walk in, pay for cake, leave.

So it very much fits the mold of “95% of sales are single items”.

It’s not hard to set the price so that, after tax, it’s exactly $60. It’s a local shop. They aren’t dealing with a bunch of locations or planning to move any time soon. They are good enough that you will seek them out in their low-rent back-street suburban mini-strip-mall. They don’t rely on walk-ins or visibility to sell. You will drive there just to eat their cake, and they are well-known enough that they do most of the high-end cakes in town for weddings and the like.

So instead of advertising a $55 cake that sells for $57.62 or whatever, advertise a $57.33 cake that sells for exactly $60.

At that point, yell fuck it and advertise a $60 cake with a decent sized font to say "Including all applicable taxes and fees"

Hell, people might actually tell others how it ended up being the exact price on the sign

No. It all has to do with retailers belief in “Psychological pricing”. Whether that belief is well founded or not is an open question but pre or post tax pricing is irrelevant.

https://en.m.wikipedia.org/wiki/Psychological_pricing

I am from a country where there are 2 economies. One above water and one below.

Cash allows you to hide revenue. You do not forward the sales tax / VAT of the item you sold, and you don't declare the revenue of the cake.

Added to that you need the cash to pay your suppliers, as they need cash to pay their employees partially in cash, as employment taxes are sky high.

Oh, absolutely that happens here too. But why would you want a bunch of heavy coins when you could make them no longer relevant? Paper money is much more compact.

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