Monday, September 21, 2015

How to Know You are Saving the Most Money: Find and Compare the Unit Price

I used to think that shopping at a warehouse club automatically meant I was saving money because buying giant size was supposed to save money.

The same thing goes for dollar and closeout stores like Big Lots. Sure sometimes the package is smaller but it is cheaper than a conventional store so I had to be saving money, right?

Pin this post if you like to save money! 

No. Not always.

Sometimes bulk buys, dollar stores, and using coupons with a sale will not save you money, in fact it could cost more money. How do you tell? You need to find the cost per unit (per ounce, pound, grams, kilo, etc.) and compare the unit prices of the same product in large and small packages on the store shelf to find the product with the lowest price.

The One Thing You Are Not Doing to Save Money: How to Find and Calculate Unit Prices  

Some stores already have the price per unit on the shelf price tag. That makes comparing unit prices very easy. Otherwise you need to do a little bit of simple math to find the unit price.

Divide the cost by the quantity in the package to get the unit price. Easy!

Example: Turmeric from the bulk bin section of my grocery store is $9.99 a pound. Like many people, I can't use a pound before it goes bad and have three ounce jars of spices in my kitchen. $9.99 seems like it is a lot more money compared to the price of turmeric in a three ounce jar for $3.69 on a nearby shelf. Let's find out:

There are 16 ounces in one pound.

$9.99 divided by 16 ounces = $.62 per ounce

$.62 per ounce x 3 ounces = $1.87 for three ounces of bulk bin turmeric

Let’s see how comparing unit prices on similar products from different stores  to save money works in the real world.

In this next example I’m doing the math and comparing the unit prices of store brand oxygen bleach from three different stores: Kroger, Aldi, and Dollar Tree. I’m using oxygen bleach because it is one of the few items that according to Wikipedia that has the same ingredients no matter what brand is on the shelf.
  • Aldi – Tandil Oxi Versatile Stain Remover, 52 ounces – $4.75
$4.75 divided by 52 ounces = .0913 rounded to .09 per ounce

  • Dollar Tree – LA’s Totally Awesome Power Oxygen Base Cleaner, 16 ounces – $1.00
1.00 divided by 16 ounces = .0625 rounded to .06 per ounce

  • Kroger – Kroger Home Sense Multi- Purpose Oxygen Cleaner, 56 ounces – $4.39
$4.39 divided by 56 ounces = .0783 rounded up to .08 per ounce

If you are shaky on your division skills or want a quick double check on your math, you can use an on line unit price calculator.

A few interesting things to note:
  • At first glance, the tubs of Aldi and Kroger oxygen look like they are the same size but if you read the label you’ll see the Kroger tub has 4 more ounces than the Aldi tub.

  • Dollar Tree wins with the lowest price per ounce but it also has the smallest package. If you use oxygen bleach for laundry, cleaning, and just about everything else like I do, you may go through those  little 16 ounce jars and clutter up your recycling bin (or trash if you can’t recycle) at an alarming rate.

  • Kroger threw me an unexpected curve when I went to the store to check the prices for this post. Kroger has their oxygen bleach on sale for $4.19. The new sale unit price for Kroger oxygen bleach is  $4.19 divided by 56 ounces = .07 per ounce for the week of the sale.
Do I calculate and compare unit prices when I grocery shop? No, not really but based on this example I should. The last time I needed oxygen bleach I bought it at Aldi because 90% of the time Aldi has the lowest price on most things. If I took my own advice, I would have done a little detective work to double check if what I thought was the lowest price actually is the lowest price.

Sure there is only a three cent difference between the highest and lowest unit price and in the grand scheme of things that might not be such a big deal (personally I’m not sweating it) but every penny adds up. If you have a budget goal in mind when you shop then yeah, a three cent difference if the item is big, bulk warehouse club size packaging can be a big deal.

Do you compare unit prices? What are your tips?

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