Penny Costs 2.06 Cents to Make in 2018, Nickel Costs 7.53 Cents; US Mint Realizes $321.1M in Seigniorage

by Mike Unser on May 24, 2019 · 42 comments

2018 Lincoln cents

The U.S. Mint spent 2.06 cents to make and distribute each Lincoln cent in 2018

The price of producing U.S. coins for circulation climbed again last year, the United States Mint disclosed in its 2018 Annual Report. And also again, for a thirteenth straight year in fact, the unit cost for both cents and nickels remained above their face values.

The toll to make, administer and distribute the 1-cent coin was 2.06 cents in FY 2018 compared to 1.82 cents a year earlier, and cost for the 5-cent coin rose to 7.53 cents from 6.60 cents. Higher metal prices accounted for the increases.

"Compared to last year, FY 2018 average spot prices for nickel increased 28.7% to $13,141.41 per tonne, average copper prices rose 15.6% to $6,683.11, and average zinc prices increased 13.2% to $3,073.86," the U.S. Mint noted.

Lincoln cents are composed from 2.5% copper with the balance zinc and 5-cent coins are made from 25% nickel with the balance copper.

Cost to Make Dimes and Quarters

The U.S. Mint turned a profit on dimes and quarters as their respective unit costs of 3.73 cents and 8.87 cents were lower than their face values.

The following two tables summarize U.S. Mint costs for the cent through quarter with the first table for FY 2018 and the second one for FY 2017.

FY 2018 Unit Cost to Produce and Distribute 1c, 5c, 10c, and 25c Coins

One-Cent Five-Cent Dime Quarter
Cost of Goods Sold ($) 0.0178 0.0659 0.0323 0.0778
Sales, General & Administrative ($) 0.0025 0.0085 0.0045 0.0099
Distribution to Reserve Banks ($) 0.0003 0.0009 0.0005 0.0010
Total Unit Cost ($) 0.0206 0.0753 0.0373 0.0887

 

FY 2017 Unit Cost to Produce and Distribute 1c, 5c, 10c, and 25c Coins

One-Cent Five-Cent Dime Quarter
Cost of Goods Sold ($) 0.0156 0.0564 0.0284 0.0711
Sales, General & Administrative ($) 0.0024 0.0088 0.0045 0.0103
Distribution to Reserve Banks ($) 0.0002 0.0008 0.0004 0.0010
Total Unit Cost ($) 0.0182 0.0660 0.0333 0.0824

 

In profit from seigniorage — the difference between the face value and cost of producing circulating coins, the dime realized $149.5 million while the quarter brought $305.6 million. The U.S. Mint transfers seigniorage to the Treasury General Fund to help finance national debt.

In contrast, the two smallest U.S. coins have lost money since 2006.

Unit Costs and Seigniorage for Cent and Nickel from 2005 to 2019

Fiscal Year Lincoln Cent Unit Cost Jefferson Nickel Unit Cost Combined 1c and 5c Seigniorage (in millions)
2005 0.0097 0.0484 $4.40
2006 0.0121 0.0597 ($32.90)
2007 0.0167 0.0953 ($98.60)
2008 0.0142 0.0883 ($47.00)
2009 0.0162 0.0603 ($22.00)
2010 0.0179 0.0922 ($42.60)
2011 0.0241 0.1118 ($116.70)
2012 0.0200 0.1009 ($109.20)
2013 0.0183 0.0941 ($104.50)
2014 0.0166 0.0809 ($90.50)
2015 0.0143 0.0744 ($74.40)
2016 0.0150 0.0632 ($66.8)
2017 0.0182 0.0660 ($89.8)
2018 0.0206 0.0753 ($119)

 

The U.S. Mint produces and issues circulating coins to Federal Reserve Banks in quantities to support their service to commercial banks and other financial institutions. FY 2018 saw production decreases in all denominations but the nickel. The bureau delivered a total of:

  • 8.057 billion cents, down 4.4% from the previous year;
  • 1.327 billion nickels, up 1.6% from the previous year;
  • 2.381 billion dimes, down 1.2% from the previous year; and
  • 1.895 billion quarters, down 1.6% from the previous year.

The four denominations combined to 13.660 billion coins, marking a 2.9% decrease from the 14.068 billion coins delivered in FY 2017. The Fed pays face value for each coin they receive and, as such, the U.S. Mint’s FY 2018 circulating revenue for the four coins totaled $858.9 million — a 1.5% reduction from $871.8 million in FY 2017.

2018 Coin Shipments, Costs and Seigniorage
(coins and $ in millions)

One-Cent Five-Cent Dime Quarter Mutilated & Other Total
Coins Shipments 8,057 1,327 2,381 1,895 13,660
Value of Shipments $80.6 $66.4 $238.1 $473.8 $858.9
Gross Cost $166.1 $99.9 $88.6 $168.2 $18.3 $541.1
Seigniorage ($85.5) ($33.5) $149.5 $305.6 ($18.3) $317.8

 

After subtracting the year’s cost to produce all four coins, which totaled $541.1 million, the U.S. Mint’s circulating profit or seigniorage for them reached $317.8 million — an 18.8% decline from the previous year’s $391.5 million.

The Mint disclosed its overall FY 2018 seigniorage at $321.1 million. This figure includes seigniorage of $3.3 million for 8 million in half-dollars, though no Kennedy halves were distributed to Federal Reserve Banks. The half-dollar’s unit cost for the fiscal year was reported at 6.58 cents. The last U.S. Mint annual report to include half-dollar figures alongside other circulating denominations was the one for 2010.

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Vachon

Shouldn’t seignorage be taken as a whole anyway? If the Mint only produced cents and nickels I could understand the problem but it’s not like the cost of the metal in individual coins exceeds its face value (the cents being 69% of face and the nickels, 74% of face currently). The Mint is still making an overall profit on its production once parts and labor are factored in so I’m not seeing the problem here… And if we’re gonna care about this, then we should eliminate the cent, nickel, and dime (and maybe the quarter too) because none of those… Read more »

Mike Cook

How do you make proper change without pennies? If something comes to, say, $9.97, and a $10 bill, for example, is given, how would you make the right change?

Sean G

You round up… That’s what the rest of the world dose.

Jordan Kidd

Pricing would have to change as well to have totals at whole numbers.

Munzen

Individual prices wouldn’t have to change. You’d only round a total purchase up/down to the nearest nickel, and only if you’re using cash. Electronic purchases would still be made to the penny.

Rick

Adjust the price of stuff to where we don’t need pennies. Makes nickels cheaper. And while your at it make $10 and $20 dollar coins to where everyone can afford them. What since does it make to make a twenty dollar coin that has a value at or above$1,300.00 . And who is profiting from them?

Rick

What can you actually buy with a penny anyways?

Silver Savior

It does not matter. I save them all as zinc or copper bullion for the future.

sam tweedy

It must be worth a lot . If you are short a penny at Publix in Florida they want your penny!! they will give you 99 cents change for your dollar and you better have one!!?????

Based Pidgey

You just… don’t make things cost fractions of dollars?

chris

you drop the use of physical money, allowing the physical space ofbthe hard drive to determine how much money you can print. nobody seems to realize that congress was given authority to issue currency, however gave that authority to private banks. thus inflation drives cost of goods rather then supply and demand.

Michael Cook

That would be a mistake, in so many ways, the big one being if our electronic and internet system goes down in a war, natural disaster, etc, I’m a huge techie, but even I don’t want a total virtual system without any backup. It would also end up hurting the millions in our society who are dependent on cash, it would be another way to put the poor even further down the ladder. Besides, I don’t want a world without physical money, boring.

Jamey

I prefer physical cash myself. I usually pay my bills electronically online but buy groceries, etc. with coins-lol.

Honest Abraham

Maybe think before posting? The issue is purchasing power: we live in an age where cryptocurrency can completely replace minted cents, nickels, and eventually dimes regardless a total collapse of USD, also that the idea of pricing an item at $9.98/$9.99 versus just $9/$10 has ZERO influence on whether the product will be purchased in mass. The fact a dollar is still divided to a tenth today is ludicrous since businesses will make millions more charging a flat $10 rather than $9.99/$9.50 rather than $9.49/etc (meanwhile the mass average $55k yearly wage will feel no less), and that the economic,… Read more »

Ray

You get rid of the percentages that create these 9.97$ and do a type of round up. Or instead things costing 10.99$ or $1.87, they would simply charge $11.00 and $2.00. Yes, there are going to be complications and changes but overall it would make things simpler. No need to dig around pockets and under seats to find that .$0.27 at the gas station. To even things out you would have round downs also. How would you get things less than a dollar? Well what do you currently buy for less than a dollar now? I’m having trouble thinking about… Read more »

Munzen

The issue’s not how many things cost less than $1, but how making change in general would be affected by eliminating the penny. The math’s the same whether an item costs $0.27 or $85.27. However nothing would require prices of individual items to all be rounded, only the total price at purchase time, which should dampen tendencies towards upward rounding. Yes, if you bought a single item its price would be rounded at purchase time, but that’s a special case. Furthermore, electronic payments wouldn’t need to be rounded because no coins are involved. Fortunately no one has to go through… Read more »

Ray

Well that’s what I was getting at. You wouldn’t want to do one thing for electronic payments which include change and not include change for cash/coin transactions. Also we need to factor in sales tax which is 7% in my state. I could also see keeping things at no lower than $0.10, that’ll eliminate the nickel and quarter. But we would get a new twenty cent piece, possibly a forty cent piece! Really we could debate all day, but it would be exciting for some new change! New coins, new price’s, new experience and challenges. You agree?

Munzen

Yes – definitely a 20¢ piece, because that fits properly in a decimal currency system. The quarter (and obsolete quarter eagle) are leftovers from the days when Spanish milled dollars co-circulated with US coins. It makes no sense to be backwards compatible with coins that haven’t been used in 170 years! Every country that’s adopted decimal currency in the last half-century (Australia, NZ, the UK, the EU, etc.) researched the issues and found that denominations based on factors of 10 require the fewest coins for making change. Even Canada, which has used American denominations since the 1850s, is looking at… Read more »

John Flynn

Pretty simple. When dealing with currency, everything would just be rounded up. No more $9.97. It would be $10.00.

Theodor W Engelmohr

Round off!

Vachon

Just a general reply… The idea is to make rounding unnecessary. I figure in this scenario, quarters (not half-dollars) would be the smallest denomination so everything would be incremented in 25 cent intervals. After all, we don’t still price products in half-cents and then round the total since the coin’s abolition, we price in cents. Eliminate the cent, increment in nickels. I assume you get the idea. Product sizes would change to accommodate a quarter-dollar incremented pricing system. I imagine it would only be difficult with certain random weight items to price but I suppose we could always look back… Read more »

Howard Lee

Now I’m going to save all of my pennies including the zinc ones

Silver Savior

I have been saving all my change since 2006. All these coins will become more valuable when they are replaced by cheaper metals or just done away with.

People seem to have no idea. They just see change as a nusence. I have buckets and buckets of all coins. It’s very crazy why every person is just not hoarding them. It’s like they are throwing real money away.

Jamey

I believe that the U.S. should get rid of the penny. Canada has and so has many parts of the UK. Prices would have to acclimate but big deal! I see paper money becoming more and more useless as the years go by. I agree that we could save lots by coming out with a $5, $10, and $15 dollar coin and start currency at $20 bucks. We already have the lame Presidential dollars and tons sitting in bank vaults being useless.

Mark

Introducing a 3-cent coin would help with the penny problem. Make them copper so the last decades rather than the 5-6 years the current zinc pennies do. One left on a salty Wisconsin sidewalk in the winter is trash after 1 year.

Darien

We used to have a 3 cent coin, as well as a 2 cent and a half cent.

jon

why not just eliminate the nickel and dime and go to a half dime. LOL

Munzen

The 3¢ piece was an oddball denomination created to make it easier to pay for postage, which was fixed at 3¢ for a long time. However 3 doesn’t divide equally into 10 which mathematically requires even more coins when making change. Every country that’s looked at minimizing the number of coins needed to make change has settled on a 1-2-5-10-20-etc. scheme. But if we get rid of the penny and maybe the nickel, a 2¢ piece would be moot. The real problem is the quarter which is a “hybrid” denomination created in the 1790s as a compromise to allow co-circulation… Read more »

James

There are many solutions to fix the issues. My thoughts would be to to swap the nickel and the dime size and material. That would make future production profitable. The first couple of years would be hard for people but they will just have to pay more attention to their coin exchanges. Just make different ridge marks on the new machines for coin readers to be programmed. The penny issue is more difficult. Copper is pricey but only used in a small percentage of the penny. Just take it out completely, replace the copper with aluminum. That would help with… Read more »

James Cornelius

This is precisely why the world has gone with digital currency. 90% of the population has no idea that XRP is a worldwide cross border currency now which is digital. Now that cryptocurrency ATMs are in Trader Joes in CA. In NJ. Starbucks accepts bitcoin for Lattes. The NYSE is listing cryptos. Fidelity allows your Ira and is selling it now…. Need i say more. A little research will show that most are missing the wealth transfer boat, but the exponential growth of this all around the world will cause coins to go by way of the steam locomotive.

Silver Savior

I love coins even pennies. Don’t even think about doing away with them. They are great.

Mark D.

Fans of coins advocating the elimination of coins. You’re probably the same helpful folks who answer Amazon product questions with, “I don’t know.” Just my two cents, and don’t you DARE try rounding it up!

Josep

I don’t see the irony in the desire of said fans of coins to get rid of pennies. The difference is that nothing sells for a penny anymore, so why bother keeping it?
When the half-cent was eliminated last century, prices became rounded to the nearest cent. And since the purchasing power of the dollar has gone down, a penny from 1933 would have the purchasing power of a dime or a quarter today.

Lee

Time to go to an Aluminum Cent

Richard

We could get by with just a nickel, dime and quarter. The others could be made in mint and proof sets. Personally I’m keeping copper cents–having seen how fast silver coins vanished it seems worth keeping the next down metal. Grandkids like to play with them, anyway. We’d do fine with one and two dollar coins as well if people were pushed into using them (not more bills of less than $5 printed). I suppose there would be a lot of complaints, though. One reasons we haven’t changed coin and currency designs for many years is that the political parties… Read more »

c_q

The treasury can just stop making cents – that’s all they have to do. Tell banks and stores to use what they have and then round off to nearest nickel if they don’t have enough cents. There’s so many reasons NOT to make cents anymore: 1) as shown it costs twice as much to make as they are worth. the federal budget would benefit many millions a year from saved mint operation time, plus shipping them around isn’t exactly free. 2) nobody spends them because they are too inconvenient, and everyone behind you in line groans if you try, so… Read more »

Seth Riesling

Lee –

When I lived in Japan from 1968-1971, they already had their lowest denomination coin made from aluminum. The U.S. Mint’s studies show that even an aluminum 1-cent coin would cost more than one cent to produce.

Fun fact: It is currently against U.S. law to melt down 1-cent & 5-cent coins due to the fact that they each cost more than face value to produce. And we are a Democracy??!! lol

NumisdudeTX

Kahoola

The problem is inflation. The purchasing power of a cent in 1913 is about 33 cents today. A cent today has the purchasing power of 1/33 cent of 1913. The solution is to make the New Dollar, take one zero off. Then the New Cent is worth a dime, the New Nickel is worth 50 cents. The only problem with this is it shows everybody, world included, that inflation has ravaged the dollar. Maybe time to buy gold or silver?

Seth Riesling

Kahoola –

It takes approximately $23.23 in today’s dollars (USD) to equal the purchasing power, due to inflation, of our first federal Flowing Hair silver dollar of 1794.
I read once, that when we had the large copper 1-cent coins in the 1793-1857 period, parents would give their kids a 1-cent coin to buy candy & told them to bring back a half-cent in change because a whole cent would buy too much candy! Lol

NumisdudeTX

Mircea

Maybe it’s time for denomination. Cutting a zero from everything, except from coins is an interesting idea. 30 cents per gallon at the gas station, like in 50’s…

Domenic

i say keep minting the penny but drop the quantity minted….Completely over-produced….sooooo many out there,

James Buchanan

“Coin Shortage” Why is there a coin shortage. Why did I wake up one morning and all of a sudden I couldn’t get my change back from the convenience store. As a matter of fact, I went in to my local gas station and was owed .59 cents in change. I wasn’t able to get it. At that moment I was literally robbed for .59 cents by a business that already profits millions. It’s not just the .59 cents that they got from me. It’s the total amount of free money they got that day by robbing the many people… Read more »