Friday, January 11, 2013

Unit Pricing

With the increased taxes on everyone, (yes I said everyone), I believe it is important to focus on ways to make our dollars go further. Many companies realize that people are trying to be more frugal and are marketing to that desire. Just because they are talking about making your dollar go further doesn't mean they are really trying to save you money. Many businesses believe profit is king no matter what. We should live by the mantra " Let the buyer beware".

I have several examples of what I am talking about, but I will cover the most recent first. Last night my wife wanted to cook fajitas. Normally when we cook these we buy boneless, skinless chicken breast. My wife and I normally go to the grocery together. While in the store she asked me to pick out some chicken. I walked over to the meat case and boneless, skinless chicken breast was $4.29 a pound. Right next to the skinless breast was split chicken breast for $1.19 a pound. A no brainer right? Apparently not. Most of the boneless, skinless breasts were gone. I proudly picked up two packs of the split breasts and told my wife for $3.10 per pound I would cut the chicken off myself.  We saved right at $16.00 by doing a little of the work ourselves and my dogs were able to enjoy the skins and the raw bones (raw chicken bones are fine for dogs to eat, cooked bones are a big no no. The bones become brittle when cooked and can become lodged in a dogs throat.) So we saved money on our supper and our dogs supper as well.

Example two:Laundry detergent. I wanted to include a picture, but was asked not to by the management of the store in which I saw this. Before I even start this example, all four are national name brands. In fact the first three are the same name brand. On the same shelf sitting side by side there was laundry packets (no measuring needed) 50 loads 44 oz. for $8.00. Next a liquid laundry detergent of a different fragrance- 70 loads 125 oz. $8.00. Next and the same fragrance as the first but in liquid form 100 loads 150 oz. $8.00. Finally, a different name brand, still nationally recognized, 166 loads 250 oz,. also $8.00. After inquiring, the numbers are in and quite disturbing. The most sold are the most expensive (the packets). The second most sold that made me feel a little better was the 100 load liquid. While I understand the convenience of the packet, I really don't see how much more difficult it would be to measure a cup full, especially considering the cup is included.

Example three: Toaster pastries. We have been programmed over the past several years to automatically think that the store brands will be cheaper than the national brands.Only one problem; I have not found this to always be the case.  This past week I was looking for toaster pastries. I tend to default to the store brands, but I noticed a reduced price sticker on the national brand. Both products had the same weight and the same number of pastries, this time the national brand was $0.43 cheaper for the box.

Example four: Dried beans. When calculating unit cost I always use ounces, but I have heard of people using servings. A couple of weeks ago I was looking at the dried beans, and I am almost always trying to find the best deal. One bag said,"Contains x amount of servings". The bag looked a little smaller than the one next to it, but the cost was less than a dime different. I picked up the larger of the two bags and on the back it had the same number of servings as the slightly smaller bag. This made me curious. I picked up the smaller of the two bags. On the larger bag, the serving size was one cup.On the smaller, it was three quarters of a cup. The lesson we have learned;always use ounces.Serving sizes can be changed by the company.

Example five: Value sized containers.We'll use Oatmeal for example. Not only have we been programmed to think the store brands are always cheaper, we have also been taught that the larger a container the item comes ,in the cheaper it is. I looked at some oatmeal not too long ago and I compared the value size container to the normal size. Just by comparing the two prices I realized they were really close to the same value. So I pulled out my phone and accessed the calculator that is on nearly every cell phone out there. Guess what? The smaller size was 3 cents per ounce cheaper. The company spends less on packaging, because it takes fewer packages to hold the same amount of a product. They charge more for that product based on the fact that we now see larger sizes as a greater value. My dad told me that the last time he went to one of the members only stores, a five gallon bucket of pickles by unit price was more expensive than buying the smaller, more usable sizes.

Example six: Coupons. Coupons can be a wonderful way to stretch your money. Some of the large retailers even have store coupons that print out when you go through the register,( i.e. save $5.00 on your next purchase of $25.00 or more). Some of these can be a good deal, but when it comes to grocery coupons there are some danger zones. 1.) Don't buy things that you normally wouldn't if you didn't have the coupon. I LOVE sweets, but I don't need them as much as I want them. Many of the coupons are for desert type items. 2.) A good rule to follow is if the item was not on your shopping list before you got the coupon, do not add it unless you can substitute it for something else that was already on your list. 3.) Coupons only good for multiple items. I have seen coupons that were only good if you bought 10 or more items. When you see these you must remember that in order to calculate the true cost you must divide the face value of the coupon by the total number of items that you are required to purchase.4.) Always check unit price. Many many times I have seen that even after the coupon has been applied, there are more affordable choices of the same item available right beside the one you are considering. Remember: there is a calculator on your phone.

And finally example seven: Sodas. The average name brand 2 liter soda around here costs $1.25, the average 20 oz costs $1.59 and the average 12 oz costs 69 cents.

Formula for figuring unit price
Price divided by ounces = unit price
2 Liter $1.25/72 ounces (that is how many ounces are in a two liter, the bottle that I had did not show this number, but on the back said a serving size was 12 ounces and serving per container was about 6. So 12 times 6 is 72) this gives us a unit price of  1.736 cents per ounce

20 ounce $1.59/20 gives us a unit price of 7.95 cents per ounce

12 ounce $0.69/12 gives us a unit price of 5.75 cents per ounce

This tells us the most popular size is the most expensive. Do you think this was by accident? Higher profits maybe? Okay, so let us finish the math all the way to the end. If you buy a 2 liter drink for $1.25 in that drink you will be able to get the equivalent of 3 20 ounce drinks at $1.59 each and one 12 ounce drink at $0.69. When we add these up we will come up with a grand total of $5.46. Then we subtract the cost of the 2 liter drink and we will have saved $4.21. If you drink 3 20 ounce sodas a day, and I know many people that do, even is you leave off the 12 ounce, and you do this 5 days a week, you will save $17.60 per week for taking a glass with you. That adds up to $915.20 per year, plus you are putting less plastic in the garbage.

I hope you have found this informative and maybe it will give you something to consider next time you are going to buy something. We all need to make our money go further.

Remember to Keep It Rural.