Dear Starbucks, a Penny for Your Thoughts

"Dear Starbucks, a Penny for Your Thoughts" by Jeff Sommer for NYTimes.com http://www.nytimes.com/2012/01/15/your-money/a-starbucks-price-increase-to-a-not-so-round-final-number.html?pagewanted=2&ref=your-money

When you go to a restaurant, clothing store, coffee shop, etc, and order your desired purchase, you always end up paying more than the listed price (unless you in live in states like Oregon, that is). Why? Because of sales tax. Now, states, counties, and even cities have differing sales tax which can cause you to pay more or less for the same product depending on where you are. As Jeff Sommer, a NYC resident, recently discovered, his once $1.91 dollar coffee is now $2.01. He explains in his article, that costumers paying with cash often do not have that 1 cent, and that pennies are becoming more expensive to produce. So what does this mean for businesses and consumers alike?

"Now Starbucks is making a certain class of New Yorkers count pennies. On Jan. 3, without warning, it set the net price of a tall cup of coffee in Manhattan at precisely $2.01, including tax.

Starbucks menu boards list the new price as $1.85. But when it’s time to pay, and when local taxes are added to the bill, a tall cup of coffee comes to $2.01."

As products increase in price, even by a few cents, Sommers notices, but does not stop spending money on his coffee, nor do the other customers. What does the 1 cent really mean?

"Peter E. Rossi, a marketing expert at the University of California, Los Angeles, said the unusual pricing touches on a national issue. It “exposes the absurdity of our current currency system, the feeling among many people that we need to get rid of the penny,” he said.

There are, in fact, continuing efforts in Congress to abolish the penny. Mike White, a spokesman for the United States Mint, said a penny cost 2.41 cents to produce last year. “Basically,” he said, “it’s cost more than a penny to make the penny since 2006.” Research is under way into cheaper methods."


From the perspective of a business and a consumer, what do you make of this change in price. What about the pricing of products and the value of a penny? Have you experienced increases of products you buy regularly, and if so, did it change what you buy at all?