How do I round my prices?

Why can't I make all my prices an even number? 

We often we see practitioners wanting to promote a nice even numbered fee that is inclusive of applicable taxes (GST/HST). Unfortunately, depending on the price point you are trying to achieve and your local tax rate, this is not always possible.   

Taxes are calculated within the system using standard accounting practices which are based on the rules set out by the various governing tax agencies. As an example, CRA in Canada defines that GST / HST taxes need to be rounded off to the nearest cent using these rules: 

  • If the amount is less than half a cent, you may round down.   

  • If the amount is equal to or more than half a cent, round up.  

Therefore some “Even prices” are simply not possible. To illustrate let’s walk through a hypothetical case, let’s say you are a massage therapist in Ontario, and you want to advertise a “tax in” massage fee of $106.00. Let’s work this backwards to determine what your service fees and resulting tax will be using the following formula. 

Service fee = Tax-in Price / (1+ tax rate) 
Service Fee = $106.00 / (1+.13) 
Service Fee = $93.805 rounded to $93.81 

Remember accounting practices (and related software) understands that there is no such thing as a half penny so this needs to be rounded to the nearest cent, which would be $93.81. 

Now that we have calculated the service fee, let’s calculate the Ontario HST tax that needs to be charged using: 

HST = 13% of Service Fee 
HST = $93.81 x 13 / 100  
HST = $12.195 rounded to the nearest cent is $12.20 

This will give you a total tax in fee of $106.01 not $106. 

Ok, so now let’s adjust our service fee to $93.80 and calculate the taxes to see what we get. 

HST = 13% of Service Fee 
HST = $93.80 x 13 / 100  
HST = $12.194 rounded to the nearest cent is $12.19 

This now gives us a total tax-in fee of $105.99 still not $106. 

As you can see, when advertising a tax-in fee you may not always end up with a nice even number. You need to follow good accounting practices to keep your books on the right side of the auditors. Rest assured, the system’s billing tools use standard accounting practices based on government regulations, protecting you from any accidental tax fraud.