How to Create Value for Customers by Counting Your Pennies

Recently, Seth Godin illustrated how value can easily be degraded by illogical processes. As an example, he shared a link to a $2.50 product that costs more than $8 to ship. As a taxpayer, you might find it interesting that one US cent currently costs more than 1.5 cents to mint. Varying costs of the metals used in the composition of pennies creates challenges for the US Mint to keep production costs balanced.

The cent’s composition was changed in 1982 because the value of the copper in the coin started to rise above one cent. Some 1982 cents use the 97.5% zinc composition, while others used the 95% copper composition. The price of copper later returned to profitable levels.

As of May 26, 2007, the price of copper is $3.39 per pound and zinc is $1.67 per pound. At these prices, the pre-1982 copper cent contains 2.267 cents worth of copper, which makes them an attractive target for melting by people wanting to sell the metal at a profit.

The currently produced copper-plated zinc cent contains 0.943 cents worth of metal. However, the mint spends about 0.6 cents[3] to produce each cent in addition to the cost of the metal content. Presumably with the rapid rise in price for zinc, the US Mint will have to find another alternative…continue reading

The value that you can provide to your customers is directly related to the cost of developing that value. If you can lower the cost to create value, then you can offer more value to your customers. You can save quite a bit when you count your pennies. How much do your pennies cost to produce?

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