Buying stuff in bulk is cheaper, right? The more you buy, the cheaper it is. Correct me if I’m wrong, but the larger the pack or bottle size, the lower the price per kilogram, pounds, litre or gallons this item is. You know this, don’t you?
When the German grocery giant Aldi moved into Australia, although unit pricing was used occasionally, and only on some product lines by the major retail outlets, Aldi’s use of unit pricing in its advertising and advertorials on evening current affairs shows pushed the two grocery giants to follow suit.
Using the popular Australian spread Vegemite as an example, the price per 100 grams can vary depending on the size of the jar that you buy. Using the online store of one of Australia’s largest grocery retailers I noticed that the unit pricing starts at;
- $3.08 per 100g for the 145g travel tube,
- $2.39 per 100g for the 150g jar,
- $1.92 per 100g for the 220g jar,
- $1.84 per 100g for the 380g jar,
- $1.57 per 100g for the 560g jar.
That last unit price is almost half the unit rate of the travel tube packet, although, to be fair, with the travel tube, which looks like a toothpaste tube full of Vegemite, is not a very popular means of purchasing this product, so there’s a factor of supply and demand within that pricing structure.
When the American big-box retailer Costco moved into Australia, the media quickly jumped onto their often comical oversized packaging of everyday items which has been parodied in television shows like The Simpsons. As such, Kraft released a whopping 950g tub of Vegemite which is exclusive to Costco with the unit price of $1.23 per/100g which is a saving of $0.34 per 100g compared to the largest sized jar you can buy in a traditional grocery store.
“This is not news” I hear you thinking. Everyone knows that the bigger packaging, the cheaper the unit rate is. Buying the 2 litre bottle of Coca-Cola is more cost effective than buying the 1.25 litre bottle if you drink a lot of that soft drink. Buying a full case or slab of 24 beers is cheaper per bottle or can than buying a six-pack. Buying the largest box that your favourite cereal comes in make more sense than buying the smaller boxes.
But, is this always the case? The answer is no, hence why I’m writing this post. There are a few things to look out for to save yourself money while doing the shopping.
Recently I was doing the grocery shopping and went to purchase my favourite brand of coffee. This brand comes in sizes (off the top of my head) of 100g and 200g jars, although the way manufacturers are downsizing their products and charging the same amount the jars might be 95g and 190g now. The standard unit price of the smaller jar is somewhere over $10.00 per 100g while the unit price of the 200g jar is closer to $9.00 per 100g. It always makes sense to me therefore to buy the larger jar.
What I noticed was, when this product was advertised in the store’s catalogue, the unit pricing for the smaller jars was something like $8.95 per 100g making it cheaper to buy two of the smaller jars than to purchase the larger jar as I normally would. I got the same amount of product for a cheaper price.
But a word of warning about sale pricing. Recently the 220g Vegemite jar size was on special with its unit price making it equal to the next size up. If you are a lover of Vegemite, buying a 220g jar at the same unit price as the 380g isn’t really a cost saving unless you buy two jars which would mean that your purchase price is $8.08 to receive 440g rather than the normal $8.44 you’d have to pay when buying two 220g jars. But still, if you ARE a lover of Vegemite, the fact is, you’re buying 440g at $1.84 per 100g when you could be saving yourself more buy purchasing the 560g jar at $1.57 per 100g or $8.79 per jar.
Using Vegemite as an example again, there ARE times when the sale price looks inviting by making it more cost effective than the next size up, and yet it may still be dearer per unit price than a larger packaging size. One of Australia’s retailers is famous for using solid dollar amounts for bulk purchases of any item. That same 220g jar of Vegemite was advertised as “2 for $8” which is $1.81 per 100g. Clearly it is better than the $1.92 per 100g for its standard unit pricing, and its also better than the previous advertised price matching the unit price of the next size up which was $1.84 per 100g.
But again, this unit price for this “special buy” item is not cheaper than buying the 560g jar.
Bulk Packaging Trickery
Last weekend I visited one of the department stores where we buy the occasional clothing for our kids from. The 7yo was in need of more school socks while the 4yo was in need of more every day socks. When buying things like undies and socks I generally look for the bulk packs as they are cheaper. What I discovered was, for the every day socks for the 4yo, the individual socks were cheaper than the bulk pack. And no, the individual ones were not on sale. This was their standard shelf pricing. Each pair of socks on their own were $1.00 while the 4-pack was $5.00, and this did not make sense to me.
Whether this was intentional, with the retailer banking on the fact that most people would assume the four pack to be more cost effective, this retailer is profiting off those who don’t bother to check the unit pricing. There is a chance however that it just comes down to an employee at head office who isn’t up to speed on how that whole “cheaper when bulk buying” thing works, or they simply aren’t the sharpest tool in the shed and have thought to themselves “of course it should be dearer… you’re getting more items…” Yeah, um.. no.
Sometimes however, the bulk packs are more expensive per unit for the same quality of the product, but there’s a superficial difference which will entice the shopper to buy the bulk pack rather than the individual item, or multiples thereof to match the quantity of the bulk pack.
Recently I went to purchase underwear for myself. It’s no secret that I am a Star Wars fan and have purchased a few items of merchandise, not only for my boys, but also for me. Naturally, as you do when you’re a 41yo Star Wars fan in need of new underwear, you have to buy the Star Wars branded undies. There were a few designs to chose from in the individual pairs. The price for these were $8.00 per pair. Then I noticed the three pack. As I was in need of more than one pair I thought that would be a better way to buy them.
Keeping in mind that these were the same manufacturer, with the same cut of underwear, the same material and everything else about them being the same, I assumed that if three individual pairs were a total of $24.00, then surely a bulk pack would be less than $24.00. To my surprise, the three pair bulk pack was not three times $8.00, but it came in dearer than buying three individual pairs. How and why is this possible? It’s the superficial difference that allowed for this.
Each bulk pack had a pair of underwear with a pattern or design that was so much cooler than the individual pairs. Two of the three were the same that you could buy on their own, but if you want to get the coolest looking Star Wars undies, and you know you do, then you will be willing to fork out $25.00 for the bulk pack rather than $24.00 for three individual pairs. I bought four individual pairs and stuck it to the man. Who needs to be cool anyway?
The other thing that manufacturers do is put special printing on a larger packet for novelty purposes, and then charge more or the same unit price as the smaller packet enticing shoppers to buy more of their product without a reduction in savings. Cereal boxes are famous for this. The larger boxes might include a cut-out to keep and collect, or puzzles, games or random trivia information printed on them to get your kids to plead for that larger box.
Cereal manufacturers used to include toys and trinkets inside the larger boxes with the value of the throw away item generally costing less than the difference in cost to make the larger item, and by charging the same unit rate as the smaller box, increasing the profit line by selling more product at a higher rate than would otherwise get charged for a “bulk” supplied item.
This isn’t always the case however, with one retailer having Kellogg’s Corn Flakes at $1.25 per 100g for the 220g while the 725g box is only $0.55 per 100g AND each time you purchase two boxes you can send away for a free book. Sometimes the bulk deal is a better deal in more than one way.
Store Management Idiocy
At our local shopping centre, after the upgrades and the expansion was finished a new health food store moved in. The owner doesn’t seem like the most intelligent person when speaking to him (yes, I AM being judgemental, I know), and after I noticed a few pricing discrepancies I feel justified in expressing that.
A certain cereal that my wife enjoys is about $12.98 for a packet which is 200g. At $6.49 per 100g it is way more expensive than the $0.55 per 100g for the Corn Flakes, but this health food store help you out buy having a bulk discounted price when you buy three packets. Normally, three packets bought together would be $38.94, but the price is reduced three packets for $35.00 which equates to $5.83 per 100g and you get 600 grams. The same cereal is also supplied in a bulk 500 gram packet which is $34.98 or just over $6.99 per 100g.
Although I called this section “Store Management Idiocy” there’s a fair chance that the person who buys the 500g packet at $6.99 per 100g is in fact the stupid shopper when they could be getting 600g at $5.83 per 100g. And the best thing with that offer is, you can mix and match the types of cereal getting two bags of apple and cinnamon and one packet of almond and apricot or whichever other types they have rather than buying one large packet of just one flavour.
Within that same store there are plenty of other pricing discrepancies that I have noticed, and it’s either the shrewd seller or the clever customer who benefits when paying close attention to what’s going on by way of pricing in any given store.
So to sum it all up, sure you can get great bargains for bulk packaged items, but never assume that because the bulk package looks like a great deal, a special buy on bulk quantities of the smaller item or the sale price of the smaller item might make that deal better.
Note: Prices were correct at time of publishing and may not be reflective of actual unit prices in store.