Why do gas stations charge 9/10ths of a cent, and how do they even take that out of your bank account?
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If you think that’s strange – some stocks will trade at hundredths of a cent. So the stock might be $3.3785
You ever see Superman 3?
Because if you have one gas station charging you 1.90^^9 and another charging you 1.91, the first one will look one cent cheaper while still making 90% of that cent.
And in the end, they round the result. You’re already multiplying the price with a a fractional number of units (liters/gallons). If you buy 5.1 gallons at 1.91, that’s just as inconvenient (9.741) as exactly 5 gallons at 1.909 (9.545).
Started out as taxes set at .9 cents per gallon. Station owners passed the tax on. And $.199/gal is a much easier sell than $.20/gal. Even if the station would keep the extra .1 cent they’d lose sales to other stations. And the pumps don’t register the tenth of a cent. But you used to be able to run the pump really slow and see the partial gallons go up before the cent amount changed. The games I played in high school.
>ELI5: Why do gas stations charge 9/10ths of a cent, and how do they even take that out of your bank account?
They don’t. They only take out the amount (price*volume) rounded to nearest penny. However, for the gas stations, that extra ten cents per fill-up adds up over the day.
With all the gas stations using nine tenths pricing I just ignore that part. 3.519 is 3 cents less than 3.549 so I just call it 3.51 or 3.54 and be done with it.
It might be different if there was a gas station that only charged in whole cents… I might even prefer them as long as the gas was good…
There was a historical reason for 9/10 pricing today it’s just institutional inertia that keeps it. Back in the early 90s gross gas profit of 7-10 cents per gallon was normal a fraction of a penny was huge chunk of change and it influenced customers where bought gas.
Today the days of low margin gas are long gone. With the lower volume of gross gas sales thanks to fuel efficiency, electric / hybrid and work from home and the higher cost of labor the gross margins have to be much higher to operate a profitable business. I’d guess that 50c per gallon or so is far more common. So the 9/10 doesn’t the same necessity anymore
I have often wondered how this is any different than the whole office space / superman 3 scheme
It seems to be an unusual US custom to express that fraction as 9/10 instead of simply using .9.
In Australia, price is expressed as cents/litre, so we pay something like 180.9 ¢/L
Not just for us but gas stations, super markets, anyone that sells things. Almost everything has a .009 cents for fuel and a .99 cents for products. I will just copy and paste my previous response in this thread. **** We own a fuel oil company that delivers the product to both homes, trucking outfits and gas stations. The .009 cents is for the consumer. We tried not to do it 30 years ago, but because our competition didn’t follow our lead we were forced back to it. If we are selling fuel for $1 a gallon and our competitor is selling for .999 a gallon we would actually lose business. Same goes for any price point. We are $1.50, they are $1.499 They appear to be much cheaper than us. Our residential customer are buying anywhere from 150-250 gallon a pop. Commercial customers 500-5,000 a pop. If we deliver say 20,000 gallons today that .009 cents is also almost $200 do that 6 days a week all year round that is $50,000-$65,000 difference. And we do notice as that is net profit not gross. And if we lose a delivery over .009 we lose a lot more than that tenth of a cent
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