example= $2.55 9/10 v. $2.56
2006-12-11 09:18:14 · 5 answers · asked by Anonymous in Business & Finance ➔ Other - Business & Finance
when the gov't raises gas tax's why dont they just do the 1/10, thats fed or state?
2006-12-11 09:39:20 · update #1
they do that to make it look like it is a whole penny cheaper...
2006-12-11 09:20:41 · answer #1 · answered by Sharp Marble 6 · 0⤊ 1⤋
"No one seems to know exactly where or when the practice originated, but everyone agrees gas was sold at the pump in fractions of a cent at least as far back as the 1920s or 1930s, when automobile culture really began to take off.
Some say that the fractional pricing was introduced in response to federal gasoline taxes that were themselves assessed in parts of a cent. Others say that tiny price changes of a tenth of a cent were more significant back when a gallon of gasoline didn't cost much more than a dime. And everyone agrees that pricing at nine-tenths of a cent gives the station owner the same advantage a grocer might get for charging $1.99 rather than a whopping $2.00 for a bottle of sparkling water.
Whatever its origin, the practice is now built in to the pricing system. Federal and state taxes on gasoline still work out to a fraction of a cent per gallon and get paid when distributors purchase fuel from the refineries. The distributors who sell to the filling stations often set their prices such that the total after tax ends with nine-tenths of a cent. The station owner who buys it can then just mark up the price by a few whole cents and pass along the nine-tenths to the consumer.
In the 1980s the government of Iowa abolished nine-tenths-pricing on the grounds that it was deceptive but then rescinded the ban four years later."
2006-12-11 18:26:23 · answer #2 · answered by mktgurl 4 · 0⤊ 0⤋
Mainly as a marketing ploy!
We, apparently, subconsciously ignore the fraction (or decimal point in other countries). This means you're not paying, 'really' $2.56, but $2.55, according to your mind.
Think about specials or regular prices for other things! How many items are on sale for $4.99, $9.99, $29.99 or $999.99?
The 'big' ones, the $100 and any $1000 are where it counts. You're not paying "$1 less than $1000"; you're paying "$900 + some more" - which registers as $900, not $1000.
2006-12-11 17:26:30 · answer #3 · answered by Anonymous · 0⤊ 0⤋
That fraction represents part of the Tax on oil...
2006-12-11 17:26:05 · answer #4 · answered by Scott 6 · 0⤊ 0⤋
It`sa ploy used by the big oil companiesto fool customers, that is why they make billions of dollars every year.
2006-12-11 17:35:10 · answer #5 · answered by liseb_98 3 · 0⤊ 0⤋