No More Penny. What That Could Mean for Consumers.

The penny is coming to an end, and the end of an era is upon us. While the reasons for dropping the penny are understandable – they are rarely used anymore, and they cost more to make than they are worth – we are left wondering what a penniless world will mean for payments and pricing.

Will Prices Be Rounded Up or Down?

Companies often price products and services in amounts just below key dollar amounts, like $1.99 or $1,999. There’s a reason for that, and it’s drawn from psychology and human behavior.

Psychological pricing nudges consumers toward purchase. But in a penny-free world, will those prices shift to $2.00 or $2,000? What about $1.95 or $1,995?

This will be up for debate as companies are deciding on potential pricing changes. It’s possible there won’t be much change, especially since most transactions are digital. I expect high-ticket items to stay the same, but rounding could become more common for lower-priced goods — particularly for cash transactions.

Still, businesses have to keep change on hand for cash paying customers. There’s also sales tax to consider as well, which of course bumps the total cost to the consumer above these key thresholds anyway.

If some prices get rounded up, I don’t expect the cost to the consumer to be substantial. For example, Canada made its final penny in 2012, and required rounding to the nearest $0.05 – effectively a neutral result to the consumer, with roughly half of the prices going up, and the other half down.

Even if prices in the U.S. are occasionally rounded up, a cash user might lose $5-$10 per year.

Precision in Planning

If prices do get rounded to even amounts, it may make planning purchases a bit simpler. It is easy to calculate the total cost of an item that retails at $100 even with a tax of 7% – no calculator or AI required.  

What to Do with Your Pennies

Of course, you could always roll them and deposit them at the bank or donate them to charity.

I’m not a collector, but it may be worth keeping some for nostalgia and potential long-term value. At the very least, imagine your great-grandchildren one day holding a penny and asking, ‘what is this’?