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Retailers who ask customers if they would like to donate to charity after a sale are using it as a test to see if they can raise prices.

PenguinCoder 9y ago
They also use it as a tax write off...
- fjsolwmv 9y ago
  How? It's not their money in the first place so collecting deducting it just goes back to zero.
  - whathaschanged 9y ago
    Does the money go directly to a charity? Or do they collect it on behalf of a charity and then donate it to said after end of business (or 4-8 weeks)? Electronic transactions are abused far more by companies/corporations compared to kids picking up a water jug of pennies.
    - icebraining 9y ago
      I'm sure they collect it for a while, but that doesn't mean they can declare it as their own for tax purposes.
- waegawegawe 9y ago
  I'm not so sure about that. Citation? I believe in general (at least in the US), it would be really unusual for a corporation to get a tax break for money that was never theirs. The chief factor in how corporations are taxed in the US is their domestic profit. Whether you donate to charity or light it on fire, it shouldn't matter at all to the corporation's profit, and therefore it shouldn't matter to their taxes. I'm happy to be convinced otherwise, though. Let me know.
- gnicholas 9y ago
  (former) tax lawyer here. This is definitely not possible, at least in the US. They could only take a deduction if they first recognized the donation as income — which would defeat the purpose and also be a very odd way of characterizing the transaction.
adamzerner 9y ago
Do you know this, or are you assuming this? It is certainly possible that, at the margin, someone is willing to spend money on a charity but not spend that same money on the product. Although I suppose there's probably a correlation between donating and willingness to pay more.
- Spooky23 9y ago
  It’s a way to test shoppers and evaluate their willingness to add a marginal dollar for spending. That can be correlated against buying behavior and taking advantage of discounts. Right now, for a grocery store, that means they can put butter on sale that women will buy for Christmas cookie making, and market sprinkles and decorative sugar at higher prices (or with a coupon) to increase customer value. That MDA heart that you bought on Labor Day weekend helps assess the effectiveness of that sort of promotion.
  - njarboe 9y ago
    I really like Trader Joe's that does not do all of this segmented pricing, sales, and coupons. I wonder if they can survive without all that in the long run. Maybe with having mostly store brands it will work out for them.
    - kuschku 9y ago
      ALDI (the company behind Trader Joe’s) has been doing without ads, segmented pricing, or coupons for half a century and became one of Europe’s largest retailers. I’m sure they’ll stay competitive in the future.
      - germanier 9y ago
        In their German home turf they started a huge ad campaign last year (their first ever except for a weekly newspaper ad) and even started to discount some of their regular product lines. Maybe the days they could survive without all that are over?
fjsolwmv 9y ago
That seems like a very weak and noisy signal compared to, you know, directly changing prices, which they do all the time.
- tmnvix 9y ago
  Changing the price first has the disadvantage of possibly losing the sale.
- huffpopo 9y ago
  Going by industry gossip it is a very strong signal. Strong enough to be worth while even though they know customers hate it.
- BurningFrog 9y ago
  But this is data for an INDIVIDUAL person!
DrScump 9y ago
I don't think grocery retailers "raise prices" across the board. I think the "charity bundling" concept is just for P.R. The company presents the big check at the end of the campaign, and the public then credits the company, even if the company itself contributed nothing beyond a little (deductible) personnel time. The Ronald McDonald House perfected that mechanism. Some retailers used to do the same with pooling customer MDA donations, then showing up to the telethon with a big check... with the company name on it.
- DrScump 9y ago
  BTW, I'm not opposed to this mechanism if the retailer is matching customer contributions.
  - gnicholas 9y ago
    Often they tout that donations are matched. In the fine print, they disclose that there's a limit to the matching. So if the limit is low, then the "matching" concept is effectively illusory.
bogomipz 9y ago
Do you have a citation for this? What is this statement based on?

PenguinCoder 9y ago

They also use it as a tax write off...

fjsolwmv 9y ago
How? It's not their money in the first place so collecting deducting it just goes back to zero.
- whathaschanged 9y ago
  Does the money go directly to a charity? Or do they collect it on behalf of a charity and then donate it to said after end of business (or 4-8 weeks)? Electronic transactions are abused far more by companies/corporations compared to kids picking up a water jug of pennies.
  - icebraining 9y ago
    I'm sure they collect it for a while, but that doesn't mean they can declare it as their own for tax purposes.
waegawegawe 9y ago
I'm not so sure about that. Citation? I believe in general (at least in the US), it would be really unusual for a corporation to get a tax break for money that was never theirs. The chief factor in how corporations are taxed in the US is their domestic profit. Whether you donate to charity or light it on fire, it shouldn't matter at all to the corporation's profit, and therefore it shouldn't matter to their taxes. I'm happy to be convinced otherwise, though. Let me know.
gnicholas 9y ago
(former) tax lawyer here. This is definitely not possible, at least in the US. They could only take a deduction if they first recognized the donation as income — which would defeat the purpose and also be a very odd way of characterizing the transaction.

adamzerner 9y ago

Do you know this, or are you assuming this? It is certainly possible that, at the margin, someone is willing to spend money on a charity but not spend that same money on the product. Although I suppose there's probably a correlation between donating and willingness to pay more.

Spooky23 9y ago
It’s a way to test shoppers and evaluate their willingness to add a marginal dollar for spending. That can be correlated against buying behavior and taking advantage of discounts. Right now, for a grocery store, that means they can put butter on sale that women will buy for Christmas cookie making, and market sprinkles and decorative sugar at higher prices (or with a coupon) to increase customer value. That MDA heart that you bought on Labor Day weekend helps assess the effectiveness of that sort of promotion.
- njarboe 9y ago
  I really like Trader Joe's that does not do all of this segmented pricing, sales, and coupons. I wonder if they can survive without all that in the long run. Maybe with having mostly store brands it will work out for them.
  - kuschku 9y ago
    ALDI (the company behind Trader Joe’s) has been doing without ads, segmented pricing, or coupons for half a century and became one of Europe’s largest retailers. I’m sure they’ll stay competitive in the future.
    - germanier 9y ago
      In their German home turf they started a huge ad campaign last year (their first ever except for a weekly newspaper ad) and even started to discount some of their regular product lines. Maybe the days they could survive without all that are over?

fjsolwmv 9y ago

That seems like a very weak and noisy signal compared to, you know, directly changing prices, which they do all the time.

tmnvix 9y ago
Changing the price first has the disadvantage of possibly losing the sale.
huffpopo 9y ago
Going by industry gossip it is a very strong signal. Strong enough to be worth while even though they know customers hate it.
BurningFrog 9y ago
But this is data for an INDIVIDUAL person!

DrScump 9y ago

I don't think grocery retailers "raise prices" across the board. I think the "charity bundling" concept is just for P.R. The company presents the big check at the end of the campaign, and the public then credits the company, even if the company itself contributed nothing beyond a little (deductible) personnel time. The Ronald McDonald House perfected that mechanism. Some retailers used to do the same with pooling customer MDA donations, then showing up to the telethon with a big check... with the company name on it.

DrScump 9y ago
BTW, I'm not opposed to this mechanism if the retailer is matching customer contributions.
- gnicholas 9y ago
  Often they tout that donations are matched. In the fine print, they disclose that there's a limit to the matching. So if the limit is low, then the "matching" concept is effectively illusory.

bogomipz 9y ago

Do you have a citation for this? What is this statement based on?