What Does the End of the Penny Mean for Marketing?

The last penny was minted in Philadelphia last week.

Calls to remove the one-cent piece from circulation have grown in recent years.

Proponents of its phase out say they simply cost too much to make.

Per the U.S. Mint press release announcing the penny’s demise:

“Economic and production factors, combined with evolving consumer behavior, have made its continued production unsustainable. Over the past decade, the cost of producing each penny has risen from 1.42 cents to 3.69 cents per penny.”

But the ultimate savings might end up being a little more complicated. Fewer pennies likely means more nickels, which are even more expensive to mint.

The penny does have its hangers-on – including the Americans for Common Cents (ACC), which is largely funded by the company that provides the blanks used to make pennies.

Stop Making Cents

Like “broken record” or “hang up the phone,” sayings like “worth every penny” might not make much sense to future generations.

But penny phrases aside, eliminating the coin will have broader implications for brands and how they price and market their offerings.

Pennies are a core element of “charm pricing” – setting prices ending in 99. Per Harvard Business School:

“The psychological principle behind charm pricing is to take advantage of the so-called “left digit bias” that subconsciously makes $1.99 appear closer to $1 to some consumers.”

It can be effective – some reports point to as much as a 24 increase in sales.

The U.S. Treasury Department says businesses will have to start rounding to the nearest nickel. Prices ending in 95 can still benefit from the psychology behind charm pricing.

But it illustrates a broader shift in transactions brought about by the demise of the penny, impacting everything from pricing strategies to “round up for charity” programs.