Price Per Unit Isn’t Always Useful

The idea of “price per unit” is a pretty useful one to have when you’re shopping for goods. It’s a simple idea that many of us know about, but it never hurts to break it down again for new readers.

When you’re at the grocery store and you’re considering items, you’ll compare a lot of things – the item’s brand, the price, and the number of items in the package. Often, you’ll settle on a particular brand or two pretty quickly, which leaves you worrying only about variations between price and number of items in the package. Which one should you buy?

The best bargain in this situation is (usually) the one with the lowest “price per unit.” In other words, you figure out how many “units” are in each package, then divide the price of the package by the number of units.

Here’s an example. You pick up two packages of juice boxes for your kids. One of them has ten juice boxes, while the other package has thirty six juice boxes. The package with ten boxes costs $4, while the package with thirty six boxes costs $13.

You just divide $4 by 10 to get the “price per unit” – in this case, the price per juice box – of the smaller package, which is $0.40. For the other package, you divide $13 by 36, which gets a result of $0.36. In this case, the larger package is the better bargain.

The way I like to think about it is that when you have the packages at home, each juice box from the smaller package is costing you $0.40, whereas each juice box from the larger package is costing you only $0.36.

You can do this with almost any item that has either a “count” or a weight clearly displayed on the package, which honestly covers almost every food and household product. It can help you figure out which item provides the most “bang for the buck.”

Most of the time, “price per unit” points you to the specific item you should buy. If you’re getting the best price per unit, then the item is simply going to last the longest for your dollar.

However, price per unit isn’t perfect. There are several reasons why you shouldn’t always follow it.

First, don’t do it when you’re dealing with perishable goods. If an item can rot or somehow degrade into unusable quality, then price per unit isn’t going to help you. Usually, price per unit encourages people to buy a larger package, but if you can’t finish that larger package, it’s not a bargain.

For example, you might be able to buy bananas at, say, $0.25 each or you can buy a bunch of ten bananas for $2. In that case, the bunch provides bananas at $0.20 per banana. However, what if you only eat a banana every weekday? Early in that second week, the bananas are completely mushy and, unless you’re composting or making banana bread, the bananas go to waste. That means your bunch of ten bananas is only providing six bananas, which means their “price per unit” is actually $0.33.

Unless I’m dead sure that I can consume all of the items in a perishable bundle in the very near future, I skip it and buy the items individually.

Second, don’t do it if you’re lacking storage space. Most of the time, the larger package is the one with the best “price per unit.” That means your cupboards and pantries can easily fill up with those larger packages.

If you have plenty of space for storage, this isn’t a problem. However, if your kitchen and other storage space is tight, then you need to really pick your battles when it comes to bulk buying.

You can choose to ignore the “giant” packages if you’re in that situation. Another option is to only buy a few items in “enormous” bulk – the ones that provide a huge savings.

Third – and I think this is the big one – don’t do it if the bulk purchase will increase your consumption. We look at this as the “soda rule,” though it applies to other things.

I enjoy an occasional soda, as does Sarah. However, if we have a large package of soda in the pantry, it becomes a lot more tempting to indulge in one rather than drinking water. Not only does this make our calorie count go up without even thinking about it, it gets expensive. It also turns a “treat” into something more routine.

We’re much better off if we just buy one or two of our favorite sodas and keep them in the fridge. If there are only one or two of them in the house, then I’m less tempted to consume them.

I think this principle applies wonderfully to junk food. If there’s junk food in the house – particularly when there’s plenty of junk food – it’s really tempting to consume it. Sure, it might be a better “bargain” at the store, but it often just raises your calorie count without really filling you up.

I live by these principles when shopping for groceries. I heavily use “price per unit” in our buying decisions except for fresh produce and junk food, which basically limits me to using price per unit just for staples and for household products.

Price per unit is a really powerful and simple tool, but it’s not a perfect tool for all situations. Knowing when to use it and when not to use it will save you money, too.