SACRAMENTO, Calif. — Today's Why Guy question comes from Risa Hiruo: "Why are prices at the gas station listed with a 9/10 of a cent at the end? Why not round off?"
It's wild to think about it, but back in the 1930s, gas was under $0.10 a gallon. So, if you added just one cent to a gallon of gas that costs 10 cents, that's a markup of 10%.
That might have caused a revolt, so to soften the increase, gas station owners boosted the price by flash 9/10th of a cent so the price wouldn't be a full penny increase.
I asked Patrick DeHaan of gasbuddy.com if this is just an old thing that’s continued.
"Back in the old days, the tax was added on -- 9/10ths of a penny -- but it stuck as prices evolved and increased," he said.
So, the 9/10ths of a penny is still with us since the Great Depression, although it's meaningless in today's economy.
Why? It's marketing. It's the same reason why a car is listed for sale at $9,999 instead of $10,000. It feels like a better deal.
The 9/10ths of a penny listed price is something that started 90 years ago and for no good reason is still in existence today.
Find the cheapest gas prices in Sacramento HERE.
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