5 ms·

Another reason chains do this is to see if customers have extra disposable income in that locale so they can raise prices on items there. This is the same reas

Another reason chains do this is to see if customers have extra disposable income in that locale so they can raise prices on items there. This is the same reason you’ll see this at grocery stores.

cjbgkagh 4y ago
Yeah, this is the real reason they do this even though they know it annoys you. It is a very strong signal of price sensitivity, it’s because they can’t ask “do you feel like you still have money left over” after each purchase. Somewhere some data scientist made the world more annoying. Similar to how they figured they could make more money by putting milk in the back of the store.
- winReInstall 4y ago
  The whole thing is designed as psychology journey. First buy veggies to ease your conciousness, then but sweets and vine.
- Zigurd 4y ago
  And this is why seemingly innocuous things need to be regulated. Culture hacking for profit isn't dumping mercury in the water supply, but the dark patterns degrade the environment as if they were poison. You can't fix or regulate all of it, but doing what is practical, to disadvantage predatory commercialism, can add up to a huge benefit to society.
echelon 4y ago
Wow, this is eye-opening. What a scummy tactic. Do they also claim tax write-offs for your donations?
- PuppyTailWags 4y ago
  Of course
- mehlmao 4y ago
  I donate $5 at Publix. Publix's income (and tax responsibility) increases by $5. They donate my (and everybody else's) $5. Their income (and tax responsibility) decreases by $5 to the original level.
- whartung 4y ago
  Well, I hope so. They have to record the income, which is taxable. So if they're donating it to a charity, they should take the write off. It's an interesting situation, since the stores are not charities themselves. I don't know if you, the consumer, can write it off. I don't know if there's a some kind of "pass through" loop hole that lets the consumer write off the donation, while the store funnels it to the charity, but themselves do not get dinged for the taxes on the income.
  - hackernewds 4y ago
    Does it lower their effective tax? Where they claim the donation, so that I've effectively donated to them?
    - neodymiumphish 4y ago
      No, because if they bring in $10k in revenue from these donations, but then still donate $10k to the charity, their effective income isn't changed by the donation. Maybe they can stake a claim publicly to donating that much income, but that's all publicity (and shouldn't they stake some claim, since their efforts led to such an increase in funds donated to the chosen charity?). The issue in this case is that CVS committed to a donation to the charity, then had customers pay that money on their behalf, effectively.
  - neodymiumphish 4y ago
    There are two ways this could happen, either of them have the same effect for the company handling the donation. First, McDonald's takes the money and sets it aside, using their POS systems to segregate these funds from their traditional revenue. At the end of whatever time frame, they send the accumulated funds to the non-profit. The consumer can use these donations as a write-off by simply keeping their itemized receipt and showing the round-up. Second, McDonald's could collect the funds as revenue, then make the donation as themselves. This is most likely not legal, since the consumer can also count the revenue as charitable donations, so it wouldn't make sense to have the same funds sent for the same purpose but tallied as a donation from two entities. However, this money would be revenue, then a donation, so it would have an impact against their legitimate taxable revenue/profits. For example, let's say McDonald's earns $1b in revenue, including the consumers' donations of $10m and amount to a total profit of $100m. Their profits without the donations is $90m. By donating the $10m from their $100m in profits, their lowering their taxable profits to $90m, making for the same tax obligation as if they didn't take the money in as income. The only place for nefarious activity in all this would be the potential for earning interest from the donations in the time between receiving the funds and forwarding them to the charity. Curious how they would be able to justify those earnings, if they did something like that.
- aidenn0 4y ago
  I'm not an accountant, but I think tax write-offs are different for businesses. If you gave them $5 and they lit a 5 dollar bill on fire, they get a write-off because companies are taxed on profits, not revenue. Now whether or not sales-tax gets involved on the donation I have no clue; there are thousands of different sales-tax jurisdictions in the US, so I'm not going to even speculate.
- Sohcahtoa82 4y ago
  > Do they also claim tax write-offs for your donations? Yes, but not in the "We pay less taxes because of this" way that people think. Pulling numbers out of the air here, but if they make $100 in sales with $80 in costs, they'll take an $80 deduction for their costs and pay taxes on the $20 profit. If they make $100 in sales, plus accept $30 in donations for a total of $130 in revenue, and have $80 in costs, they'll send the $30 to the charity, take a $30 deduction in their taxes for the donation, another $80 deduction for costs, and finally pay taxes on the $20 remaining profit. Obviously, it's far more complicated than that, and actual numbers will be wildly different, the point still remains that they do not get a tax advantage.
  - syzarian 4y ago
    Edit: Misread what was intended.
    - Sohcahtoa82 4y ago
      That's basically the point I'm making.
      - deleted 4y ago
        [deleted]
      - syzarian 4y ago
        When you write they deduct the $30 donation I thought you were meaning deduction on taxes. Your first paragraph is misleading. There is no tax write off since the money donated is not revenue and is not deducted in the tax sense. It’s just pass along money. The business can write off the expense of the accounting though.
  - deleted 4y ago
    [deleted]
  - gamblor956 4y ago
    > Do they also claim tax write-offs for your donations? Yes, but not in the "We pay less taxes because of this" way that people think. Businesses are not allowed to take charitable deductions for donations made using funds collected from customers for the stated purpose of donating funds to a charity (i.e., "round up for charity"). The money being donated is not the business' money to donate, ergo they are not the party making the donation and do not get the tax benefit of it. Technically, the customer gets the deduction, but for donations of a few bucks its not worth it for the business or the customer to bother with the donation receipt. Note that this does depend on the language of the solicitation. If they say "we'll donate" they can take the deduction, but they must also gross up their own revenue to include the "donated" funds, so they get no tax benefit.
- eljimmy 4y ago
  AFAIK they can't legally claim your donation as a tax write-off, at least in Canada.
- nrmitchi 4y ago
  IIRC they don't get a "tax write-off" in the traditional sense of lowering their previous tax liability. They have $X in extra revenue, but take a deduction for those $X, so it works out in the end. But the other tangiable benefits are: - Company makes big news about donating "$X million dollars to charity", which was really customers money - Company holds on to $X in money until it's actually donated (which may be in a lump sum at the end of the year). In the meantime, they're earning interest or otherwise using funds.
quadrature 4y ago
this definitely sounds plausible, is there somewhere i can read about this ?
- xadhominemx 4y ago
  It doesn’t sound plausible at all.
- chucksmash 4y ago
  +1, would also like to read more. It definitely sounds like something that could be right. I could also imagine that companies started doing this in a philanthropic way and then later realized there was a useful signal in their data (i.e. my initial cynical "yeah, that makes sense" reaction is more to do with my outlook than their motivations).
tqi 4y ago
Is there a citation for this? TBH it sounds like a just so story - in my experience, grocery store prices in a city are pretty uniform.
- citizenpaul 4y ago
  SO you personally go around checking and comparing the prices on thousands of items at various grocery stores? One of the biggest cognitive fallacies of the human brain is thinking that you can accurately aggregate and compare prices in this manner. Its one of the reasons that airplane tickets are sold the way they are.
  - ruggeri 4y ago
    They did ask for a citation. They asked for an analysis of the data. They just also gave their impression. They didn't imply that it was a comprehensive study or scientific. And they're right to ask. They shouldn't believe something just because someone said it on the internet.
  - tqi 4y ago
    Another cognitive fallacy is confirmation bias...
- dsfyu404ed 4y ago
  If you were price sensitive you'd eventually develop a feel for which grocery store had the cheap meat, which grocery store had the cheap veggies, etc. among stores with similar overall cost. In addition, there's usually some "nicer" grocery stores where you pay a premium to never have to wait in line behind someone using EBT though I think Whole Foods mostly dominates that niche these days.
  - radicaldreamer 4y ago
    A lot of people do this anyway because of product choice. For example, most people I know that have transitioned to more cooking at home as they've gotten older have favorite products which they grab from Trader Joe's, some bulk items from Costco, produce from certain grocery stores etc. but they know that you shouldn't get produce from Trader Joe's or a Target for example. And then there's availability: some veggies are not readily available outside of asian grocery stores and meat prices can vary widely from store to store.
xadhominemx 4y ago
This is not correct.
yamtaddle 4y ago
Suddenly it all makes sense. Is putting "tip" lines on receipts in situations that, until quite recently, definitely wouldn't have called for a tip, part of a similar scheme?
- hgsgm 4y ago

Another reason chains do this is to see if customers have extra disposable income in that locale so they can raise prices on items there. This is the same reason you’ll see this at grocery stores.

cjbgkagh 4y ago

Yeah, this is the real reason they do this even though they know it annoys you. It is a very strong signal of price sensitivity, it’s because they can’t ask “do you feel like you still have money left over” after each purchase. Somewhere some data scientist made the world more annoying. Similar to how they figured they could make more money by putting milk in the back of the store.

winReInstall 4y ago
The whole thing is designed as psychology journey. First buy veggies to ease your conciousness, then but sweets and vine.
Zigurd 4y ago
And this is why seemingly innocuous things need to be regulated. Culture hacking for profit isn't dumping mercury in the water supply, but the dark patterns degrade the environment as if they were poison. You can't fix or regulate all of it, but doing what is practical, to disadvantage predatory commercialism, can add up to a huge benefit to society.

echelon 4y ago

Wow, this is eye-opening. What a scummy tactic. Do they also claim tax write-offs for your donations?

PuppyTailWags 4y ago
Of course
mehlmao 4y ago
I donate $5 at Publix. Publix's income (and tax responsibility) increases by $5. They donate my (and everybody else's) $5. Their income (and tax responsibility) decreases by $5 to the original level.
whartung 4y ago
Well, I hope so. They have to record the income, which is taxable. So if they're donating it to a charity, they should take the write off. It's an interesting situation, since the stores are not charities themselves. I don't know if you, the consumer, can write it off. I don't know if there's a some kind of "pass through" loop hole that lets the consumer write off the donation, while the store funnels it to the charity, but themselves do not get dinged for the taxes on the income.
- hackernewds 4y ago
  Does it lower their effective tax? Where they claim the donation, so that I've effectively donated to them?
  - neodymiumphish 4y ago
    No, because if they bring in $10k in revenue from these donations, but then still donate $10k to the charity, their effective income isn't changed by the donation. Maybe they can stake a claim publicly to donating that much income, but that's all publicity (and shouldn't they stake some claim, since their efforts led to such an increase in funds donated to the chosen charity?). The issue in this case is that CVS committed to a donation to the charity, then had customers pay that money on their behalf, effectively.
- neodymiumphish 4y ago
  There are two ways this could happen, either of them have the same effect for the company handling the donation. First, McDonald's takes the money and sets it aside, using their POS systems to segregate these funds from their traditional revenue. At the end of whatever time frame, they send the accumulated funds to the non-profit. The consumer can use these donations as a write-off by simply keeping their itemized receipt and showing the round-up. Second, McDonald's could collect the funds as revenue, then make the donation as themselves. This is most likely not legal, since the consumer can also count the revenue as charitable donations, so it wouldn't make sense to have the same funds sent for the same purpose but tallied as a donation from two entities. However, this money would be revenue, then a donation, so it would have an impact against their legitimate taxable revenue/profits. For example, let's say McDonald's earns $1b in revenue, including the consumers' donations of $10m and amount to a total profit of $100m. Their profits without the donations is $90m. By donating the $10m from their $100m in profits, their lowering their taxable profits to $90m, making for the same tax obligation as if they didn't take the money in as income. The only place for nefarious activity in all this would be the potential for earning interest from the donations in the time between receiving the funds and forwarding them to the charity. Curious how they would be able to justify those earnings, if they did something like that.
aidenn0 4y ago
I'm not an accountant, but I think tax write-offs are different for businesses. If you gave them $5 and they lit a 5 dollar bill on fire, they get a write-off because companies are taxed on profits, not revenue. Now whether or not sales-tax gets involved on the donation I have no clue; there are thousands of different sales-tax jurisdictions in the US, so I'm not going to even speculate.
Sohcahtoa82 4y ago
> Do they also claim tax write-offs for your donations? Yes, but not in the "We pay less taxes because of this" way that people think. Pulling numbers out of the air here, but if they make $100 in sales with $80 in costs, they'll take an $80 deduction for their costs and pay taxes on the $20 profit. If they make $100 in sales, plus accept $30 in donations for a total of $130 in revenue, and have $80 in costs, they'll send the $30 to the charity, take a $30 deduction in their taxes for the donation, another $80 deduction for costs, and finally pay taxes on the $20 remaining profit. Obviously, it's far more complicated than that, and actual numbers will be wildly different, the point still remains that they do not get a tax advantage.
- syzarian 4y ago
  Edit: Misread what was intended.
  - Sohcahtoa82 4y ago
    That's basically the point I'm making.
    - deleted 4y ago
      [deleted]
    - syzarian 4y ago
      When you write they deduct the $30 donation I thought you were meaning deduction on taxes. Your first paragraph is misleading. There is no tax write off since the money donated is not revenue and is not deducted in the tax sense. It’s just pass along money. The business can write off the expense of the accounting though.
- deleted 4y ago
  [deleted]
- gamblor956 4y ago
  > Do they also claim tax write-offs for your donations? Yes, but not in the "We pay less taxes because of this" way that people think. Businesses are not allowed to take charitable deductions for donations made using funds collected from customers for the stated purpose of donating funds to a charity (i.e., "round up for charity"). The money being donated is not the business' money to donate, ergo they are not the party making the donation and do not get the tax benefit of it. Technically, the customer gets the deduction, but for donations of a few bucks its not worth it for the business or the customer to bother with the donation receipt. Note that this does depend on the language of the solicitation. If they say "we'll donate" they can take the deduction, but they must also gross up their own revenue to include the "donated" funds, so they get no tax benefit.
eljimmy 4y ago
AFAIK they can't legally claim your donation as a tax write-off, at least in Canada.
nrmitchi 4y ago
IIRC they don't get a "tax write-off" in the traditional sense of lowering their previous tax liability. They have $X in extra revenue, but take a deduction for those $X, so it works out in the end. But the other tangiable benefits are: - Company makes big news about donating "$X million dollars to charity", which was really customers money - Company holds on to $X in money until it's actually donated (which may be in a lump sum at the end of the year). In the meantime, they're earning interest or otherwise using funds.

quadrature 4y ago

this definitely sounds plausible, is there somewhere i can read about this ?

xadhominemx 4y ago
It doesn’t sound plausible at all.
chucksmash 4y ago
+1, would also like to read more. It definitely sounds like something that could be right. I could also imagine that companies started doing this in a philanthropic way and then later realized there was a useful signal in their data (i.e. my initial cynical "yeah, that makes sense" reaction is more to do with my outlook than their motivations).

tqi 4y ago

Is there a citation for this? TBH it sounds like a just so story - in my experience, grocery store prices in a city are pretty uniform.

citizenpaul 4y ago
SO you personally go around checking and comparing the prices on thousands of items at various grocery stores? One of the biggest cognitive fallacies of the human brain is thinking that you can accurately aggregate and compare prices in this manner. Its one of the reasons that airplane tickets are sold the way they are.
- ruggeri 4y ago
  They did ask for a citation. They asked for an analysis of the data. They just also gave their impression. They didn't imply that it was a comprehensive study or scientific. And they're right to ask. They shouldn't believe something just because someone said it on the internet.
- tqi 4y ago
  Another cognitive fallacy is confirmation bias...
dsfyu404ed 4y ago
If you were price sensitive you'd eventually develop a feel for which grocery store had the cheap meat, which grocery store had the cheap veggies, etc. among stores with similar overall cost. In addition, there's usually some "nicer" grocery stores where you pay a premium to never have to wait in line behind someone using EBT though I think Whole Foods mostly dominates that niche these days.
- radicaldreamer 4y ago
  A lot of people do this anyway because of product choice. For example, most people I know that have transitioned to more cooking at home as they've gotten older have favorite products which they grab from Trader Joe's, some bulk items from Costco, produce from certain grocery stores etc. but they know that you shouldn't get produce from Trader Joe's or a Target for example. And then there's availability: some veggies are not readily available outside of asian grocery stores and meat prices can vary widely from store to store.

xadhominemx 4y ago

This is not correct.

yamtaddle 4y ago

Suddenly it all makes sense. Is putting "tip" lines on receipts in situations that, until quite recently, definitely wouldn't have called for a tip, part of a similar scheme?

hgsgm 4y ago