This is something I've been trying to figure out for a while now. On the surface it seems logical. More coins equals more money right? But wouldn't they spend the same amount of time sorting a penny as they would a quarter? Yet they make 25 times more money off of that quarter. I would think their costs on processing the pennies would make it a counter-productive endeavor. Without pennies, they could conceivably eliminate 60-75% of their variable costs, while only taking a 15-20% hit in revenue. That's a 50% increase to their gross margin. Now that the company is firmly established and they are not expanding as rapidly as in the past, their fixed costs (like the cost of the actual coin-counting machines) should be more manageable. Now I don't know the ins and outs of Coinstar's financials, but from what is posted on investing websites, their variable costs are about 70% of revenue. Therefore I would conclude that they would probably be better off financially if and when the penny's demise becomes a reality. What are your thoughts?
Coinstar's income on Yahoo! Finance (no longer available)
Coinstar website
More info than you could possibly want on the US one cent coin. This is NOT a coin collecting blog. This blog is about whether we should keep the penny in circulation or get rid of it. Click on the big penny to go to the main page.
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