Pricing Transparency – the hidden cost of everything

Everything that you see in New York (and in most of the United States) costs more than the sticker price.  For goods and services this mainly comes down to sales tax, but there are some extra gotchyas.  Observe:

Total purchase price for a 12 pack of Diet Coke in the US and the UK

You walk into a store expecting to pay $7.99 for a twelve pack of Coke, and you walk out having paid $9.30.

Now there are a couple of subtleties here, namely:

  • For the most part, stores do not present the different state and city taxes separately (instead using a single 8.875% rate); and
  • In theory, you should be able to claim back the bottle deposit (this in itself will be a different post).

Now let’s go deeper.  Let’s say I need to get a haircut:

Paying for a haircut in the US and UK

Services are taxed differently to goods, as only the City Sales tax applies.  In the UK these services are charged at the same 20% VAT rate (which must be included in the sticker price).

To add further confusion, if you are buying clothing or footwear under $110, you pay no sales tax.  Bought something for $111?  Be ready to add an extra $8.50 to the bill.

Let’s also not get into what happens when you cross state lines (I’m kidding – I will!).

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