Join 3,557 readers in helping fund MetaFilter (Hide)


Why would a convenience store always ring up the wrong price?
May 2, 2012 4:19 PM   Subscribe

Workers at this one convenience store always charge slightly more than the stated price. What is the scam here?

When I was an undergrad, the family who owned this convenience store across from the university would almost always charge 5 cents more than the stickered price. (It seems like they didn't do that if it made the price roll over to the next dollar, but given that this was happening nearly 20 years ago I couldn't swear to it.)

At any rate, if I corrected them on the price they'd apologize and say it was a mistake, though it always happened regardless of who rang up the purchase. I'm sure it wasn't a mistake because one time the store came up at work, and everyone else in the office reported having the same experience. After this I decided I'd always correct them when it happened, and eventually it quit happening.

This was about 20 years ago. Recently I was in the store again and remembered this because, you guessed it, they charged 5c more than the stickered price.

What is the scam here? Surely it's not just charging a higher price--no one goes to a convenience store expecting good prices. I can't even imagine this as tax evasion since all the receipts would indicate the higher amount that they shouldn't be charging.

Whatever's going on here, it seems like it's obviously so much work for little benefit that I feel certain I'm missing something.
posted by johnofjack to Shopping (24 answers total)
 
Consistently taking a tiny bit too much money does theoretically make sense as a scam. The idea would be: all that money adds up to a lot of money over time. Even if you, the OP, were vigilant about getting the money back every time, they might think that wouldn't happen more than 1% of the time overall. And if it did happen more often, they could just stop doing it, causing people to stop being vigilant, and then they could start doing it again. (That seems to be what actually happened.)

Why not just charge more? Because then fewer people would buy the products. When you raise the price on something, fewer people will tend to buy it. This is faulty reasoning: "no one goes to a convenience store expecting good prices." People do make their purchase decisions based on prices.

But wouldn't they worry about getting caught? They should. But they might have thought: no one will sue us over 5 cents.

Aside from the obvious ethical and legal problems, I think there are good reasons why this wouldn't be a rational scam. Customers like you and your coworkers will notice it and lose good will for the store, which could cancel out any gains if they shop somewhere else. But you didn't ask whether it was a smart idea; you asked why anyone would try to pull this off.
posted by John Cohen at 4:38 PM on May 2, 2012 [1 favorite]


$0.05 is actually pretty significant when you consider the profit margins of items in a busy convenience store. Your state may have a department or bureau of weights and measures that is charged with protecting consumers against exactly this kind of fraud.
posted by Blasdelb at 4:41 PM on May 2, 2012 [3 favorites]


Charging $0.05 extra on an item with a $0.05 margin doubles your profit. If it worked and didn't cause problems, it'd absolutely be worth doing.
posted by 0xFCAF at 4:45 PM on May 2, 2012 [1 favorite]


I can't even imagine this as tax evasion since all the receipts would indicate the higher amount that they shouldn't be charging.

But what if they're not using those receipts for taxes? That's five cents they don't pay taxes on - which seems like a small amount, but it's got to be a significant fraction of the profit margin on things like candy bars and soda.
posted by qxntpqbbbqxl at 4:46 PM on May 2, 2012 [1 favorite]


Are you sure the family owned the store rather than just managing it? Maybe they were skimming money off the till at the end of the day, and hundreds of 5c increases that didn't make it onto the paperwork adds up to a little bit of extra take-home money that the boss would never find out about. Alternatively, if they did own it, but it was family run, maybe the kids or wife or both were trying to squirrel away some money that the father didn't know about (assuming he controlled the purse-strings).
posted by lollusc at 5:06 PM on May 2, 2012 [2 favorites]


I'm with the OP on failing to see the scam for the following reason:

Wouldn't it be far more off-putting (and memorable) to customers to be explicitly overcharged at the cash register every single time than to have items which everyone already knows are overpriced marked up by an extra nickel? Unless we're talking about five cent candies, I doubt having an extra nickel built in to the posted price would ever register with anyone. Yet, the unadvertised discrepancy was noticed by the OP and all of his coworkers.

If their scam is to scare off repeat customers, then it might be working. Otherwise, the whole thing is utterly bizarre.
posted by matlock expressway at 5:08 PM on May 2, 2012


This wouldn't happen to be UniMini on St. Paul in Baltimore, would it?

What I recall happening there was they would overcharge the end total, but the receipt would print out to the real total-- i.e. you buy a loaf of bread for $2.60 and a half gallon of milk for $2.40, plus 10% tax, but they'd say $5.70 instead of $5.50. The receipt would read $5.50, but they banked on people not paying attention, and they didn't make a huge effort to give out receipts, either. I'm pretty sure they were just skimming the difference, which would add up to a not-insignificant sum over the course of a day. I don't think it happened with debit or credit, only cash. They also definitely shorted change.

Mostly this was a drunk tax because all the wasted undergrads would show up late at night for sandwiches and snacks.
posted by charmcityblues at 5:19 PM on May 2, 2012 [3 favorites]


Is the convenience store part of a chain, and if so, is it possible that the higher authorities exercise some kind of control over pricing? I know there are a lot of different ways of organizing these stores (franchise, chain, etc.), and I don't know how your store is organized, but that seems like a plausible story, if the facts fit. They'd be adding the surcharge because they lack the authority to decide the prices of some or all of the items.
posted by willbaude at 5:21 PM on May 2, 2012 [1 favorite]


I don't see how it could be tax fraud.

To me it looks like an attempt, by overreaching a little on every transaction, to make just that much more money. They know most people won't argue so they can get away with it. It's greed.

There's a little restaurant near my office that just sells crappy hamburgers, hot dogs, French fries, gyros, etc. They are super vigilant about giving out only two tiny napkins per customer. It's as though they've decided, "two napkins per customer over a year = extra $1341.12 in our pocket" by some math they have run, because the two napkin thing is so rigidly enforced. I wonder if the extra 5 cents is based on a similar calculation but in reverse.
posted by jayder at 5:39 PM on May 2, 2012


I'm going to guess that the scam, as others have said, is that a little cash adds up to a lot. Take the story "Pennies for College", for example. How many years have they been doing this? To how many people, how many times a day?
posted by peagood at 5:44 PM on May 2, 2012


Wouldn't it be far more off-putting (and memorable) to customers to be explicitly overcharged at the cash register every single time than to have items which everyone already knows are overpriced marked up by an extra nickel? Unless we're talking about five cent candies, I doubt having an extra nickel built in to the posted price would ever register with anyone. Yet, the unadvertised discrepancy was noticed by the OP and all of his coworkers.

And OP went back 20 years later. Doesn't seem to be having a negative effect on return rates.
posted by one_bean at 5:56 PM on May 2, 2012 [1 favorite]


lolluscs asks a good question. But even if they were the owners, this still could have been a tax dodge - for Federal and state income taxes.

A small business reports its receipts and the costs of goods sold. On a 70 cent item, they could charge 75 cents. How would anyone know this was done? They would probably have some document that says that the price was 70 cents, and if there was an audit, the marked price would match that document.
posted by yclipse at 6:01 PM on May 2, 2012


I doubt having an extra nickel built in to the posted price would ever register with anyone.

Why do you doubt that a higher price would ever register with anyone? On the contrary, I think price always registers with everyone. 5 cents doesn't usually make the difference in someone's purchase, but sometimes it does.
posted by John Cohen at 6:08 PM on May 2, 2012


> And OP went back 20 years later. Doesn't seem to be having a negative effect on return rates.

Once in 20 years probably isn't the level of repeat business that convenience stores are looking for.

> Why do you doubt that a higher price would ever register with anyone?

Because I associate convenience stores with impulse buys, and with the fact that many people forget exact prices of items by the time they reach the checkout. Others may differ. I officially retract my hyperbole.
posted by matlock expressway at 6:20 PM on May 2, 2012


Also, the main point was simply that a discrepancy between the posted price and the charged price is far more noticeable than the exact same discrepancy (qua markup) built into the posted price itself. I do not think this claim is at all outlandish. If the point of the markup is to squeeze extra nickels from customers, it is remarkably inefficient when compared to simply building that nickel into the posted price.
posted by matlock expressway at 6:35 PM on May 2, 2012


Ha, charmcityblues, I remember that. I also remember still going there on late nights because when you've got a hankering for falafel at 3:00am twenty cents doesn't seem so bad.

There is a slim margin on some food and grocery products. $0.05 is not much for one Tasty-Kake. But think of all the Tasty-Kakes, and bags of chips, and quarts of milk, and boxes of cereal, and pretzels that these guy sell every day, day after day, and you're talking a lot of extra profit.
posted by schroedinger at 7:45 PM on May 2, 2012


What lollusc said. They're skimming.
posted by bardic at 9:44 PM on May 2, 2012


Even if they own the store and all profits are theirs: there is the markup plus the $0.05 extra per customer . It’s not mutually exclusive.

I want to argue that most of the customers a) suck at math (‘item 1+2+3+tax, wait what?’) and if they don't,
b) many people would second guess their own math before they would confront the cashier about $0.05.
How many shopping trips did it take you and your colleagues to be sure it was a mistake on their end? How many of your colleagues did ask for the $0.05 back? It most likely is just a little percentage of people.

So they make $0.05 x 500 customers/day (or whatever, but convenience stores tend to have a lot of traffic) = $25 x 365 = 9125 x 20 years you say? It adds up.

And I also believe that there are different types of customers, those who have the need/hankering and buy for whatever price, but there also are people who rather walk to the next little store if the price is too different from what they are used to. I argue that many people have an idea of what the usual price is and it would put them off were it significantly higher. And people make the decisions to buy in the aisle, where they see the price stickers, higher markup could result in less purchases.

I am sure they tried all and everything and this seems to be the 'best’ solution for them. They make more money in the end.
posted by travelwithcats at 1:01 AM on May 3, 2012


I doubt having an extra nickel built in to the posted price would ever register with anyone.

You'd be surprised. I regularly buy the same kind of chewing gum around town, and the standard price is £0.50. I definitely notice when I'm charged £0.55 or whatever, and I won't go back to that shop. The difference is insignificant to me, but I don't like people trying to skim a little extra from me, and it makes me think that everything else in the shop must be overpriced too. One time a shopkeeper asked me for £0.60, and I just said "Nah, sorry, that's a rip-off" and left.
posted by cincinnatus c at 3:10 AM on May 3, 2012


It might not be tax fraud on purpose, but it definitely IS tax fraud in effect. Unless they are somehow reporting more sales than what shows up on the printed receipt. Which I doubt. They would be on the hook for both sales taxes and income taxes on the excess sales.
posted by gjc at 5:29 AM on May 3, 2012


By 'stickered price' do you mean a manufacturer price? I've seen products with a flash on the packaging such as '£1 rrp' sold for over a pound in convenience stores here.
posted by mippy at 5:56 AM on May 3, 2012


Don't most states have laws regarding posted prices? As in a buyer is only obligated to pay a price that's posted. The posted price being one clearly marked on the shelving, not necessarily the price on the packaging. A vendor doesn't have to follow the MSRP, it's just the manufacturer's suggested retail price. But they likely DO have to clearly show their current price for an item. Thus there's no 'scam' here.

Where there's potential for a scam is if the price rung on the register is less than the price you pay. That's either the clerk skimming the money directly, or the management trying to pay less tax. That is a scam.

But as long as they have prices posted clearly I wouldn't see it as being a scam. But it would certainly make me second-guess whether their 'convenience' was worth it.
posted by wkearney99 at 11:39 AM on May 3, 2012


By "stickered price" I don't mean a manufacturer's suggested retail price; I mean the price on a manually applied sticker on the actual item. So you take something to the register, the sticker on the item you've just put on the counter says "93c," they key in 98 cents for the price, and the tax is added to that. That's why I doubt they're skimming from the till or that they're cheating on taxes.

I still don't understand the scam, though I think there definitely is one--on a cash register, n and n+5 aren't in a line with each other. I guess you could argue bad eyesight (3 and 8, 2 and 7, 4 and 9) but not always (0 and 5, 1 and 6); and that excuse really fails to convince when it's everyone in the store doing the same thing.

It's all very odd. It almost makes me want to conduct an experiment....
posted by johnofjack at 4:41 PM on May 3, 2012


There's a 7-11 across the street from a place I used to live. They pretty consistently rounded up. It made me feel a little uncomfortable (because I like numbers, mainly), but I chalked it up to: hopefully this cashier is making slightly extra, and I bet it still is not enough to bring their hourly wage up to a living wage. I'm going to bite my tongue, even though the maths in my head are shouting "ASK FOR THE PENNY!" I should work harder to make this a society where people don't need to cheat others out of pennies and hopefully my tongue-biting helps to do some small good for this person.
posted by aniola at 9:38 PM on May 3, 2012 [1 favorite]


« Older I have about a month to lose 5...   |  Ideas for a building dedicatio... Newer »
This thread is closed to new comments.