General Question

Nullo's avatar

Why is it that Stateside retail uses pre-sales tax prices?

Asked by Nullo (21944points) June 22nd, 2010

Product A is $4.57, but you get it to the register and end up paying $5.48 for it. You were going to be charged $5.48 in the first place, and you knew that it would be something like that.

What’s the point of not simply posting the plus-tax cost? Marketing? Variability?

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10 Answers

WestRiverrat's avatar

Because tax rates can vary widely from state to state, or even from town to town within a state. If it is a product that is advertised nationally, it would not be cost effective to make an ad for each tax authority.

ragingloli's avatar

Customer baiting. Display lower prices to manipulate customers into buying more than they would if the actual prices were displayed. The same reason why using X.99 is so popular among the sharks retailers. 0.99 seems much lower than 1.00 to your subconsciousness, because your focus is on the 0/1, not the part after the comma.
And I do not buy the cost argument. It can not cost too much to print a different price on the ads. It is calculated internally with the tax anyway.

Seaofclouds's avatar

@ragingloli You don’t think it would cost more for a nationwide retailer to print different ads for each different sales tax percentage and make sure they got mailed to the correct location?

WestRiverrat's avatar

@ragingloli instead of making one nationwide TV ad, now I have to make several for each TV station?

Another possible reason: When most sales tax laws were initially enacted, the people had a strong suspicion of hidden taxes. It was less damaging politically to pass the taxes if they were visible

ragingloli's avatar

@Seaofclouds & @WestRiverrat
Not enough to make a real difference. We are not talking about creating distinctly different marketing concepts for different regions, merely about tacking a different number on it with all else being identical. In today’s digitalised world, that can almost be done automatically in a matter of minutes and I really do not think it is too much to ask of an employee for a bit more attention to make sure he puts them into the right boxes, which he would have to do anyway.

tinyfaery's avatar

Does it really matter either way? I know that I am going to have to pay the tax. I am not fooled into thinking that the product is a lower price because the tax is not included on the label.

MaryW's avatar

Sorry @ragingloli I think your are a dreamer if you think employees can handle a bit more attention in pricing and tracking.. :-)
The present system: The base price is easy to ship and move around and the retail registers add the taxes… Simple.

Nullo's avatar

@tinyfaery I find not being able to easily tally up my expenses somewhat vexing.

tinyfaery's avatar

All it takes is a bit of multiplication.

WestRiverrat's avatar

@nullo Can you get a tax table from the county or state? Then put it in you checkbook. It should help you get an idea of what the total will be. Maybe carry a small calculator if your math skills are as bad as mine.

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