The Myth of Per-Unit Pricing

I think America has been duped. I'm tired of hearing consumer advocates, investigatory television news programs, in-store grocery store displays, and pretty much everybody else saying that we should be looking at the per-unit price and pretty much ignoring how much the total item costs.

For some things, it makes sense, but for a lot of others it does not. Ladies and gentelmen, repeat after me: lower per-unit cost only saves you money if your consumption of that good does not rise proportionally higher than the amount of the per unit savings.

Case in point: Pepsi. I am holding the flier for my local grocery store in my hand, and this week they have 12 pack of 12 oz. cans for 3/$10, or 2L bottles for 4/$5. Which is cheaper unit cost? According to my calculations the cans will cost about $0.78/liter and the bottles will cost you $0.63/liter. So clearly buying the 2L bottles has the lower per-unit price.

But will you spend less if you buy the bottles? Sure if you measure out exactly serving by serving into exact 12 oz. measurements, and drink only as many servings as you would with a can, then sure, you will actually save money. But, if you're anything like me, you will drink straight of the bottle, or just pour it into a bigger glass, and drink much more than you would had you been buying cans. While when I take a can, I finish the whole thing, but I know that going in. But what's another glass when you're saving so much money by buying the bottles? The way the different sizes work out, you'd need three 2L bottles (for price of $3.75) to get as much as the case of cans (for $3.33). Sure you're getting more Pepsi, but you are spending more. Will it last proportionately longer?

There was a great TV ad for some particular junk food (I forget what, maybe Wheat Thins?) which said "An open box is an empty box". What a great slogan, and almost a subliminal slur against the consumer. For me that's true for any type of junk food. You can buy something like Chex Mix in a huge family bag, a regular size pouch, or a tiny little lunch size packet. For me, once the bag is open, it's over. I will eat the whole thing. So, it is always cheaper for me to by the tiny little packages.

I think having too much of something creates an aura of abundance. When you have little of something you go out of your way to conserve it.

Case in point: Paper Towels.

When 'Supersized American' makes it to the dictionary, it will be accompanied by picture of a family in the parking lot of Costco loading a bulk package of paper towels from their supersized shopping cart into their luxury SUV, and bringing it into their 2500 square foot air-coditioned palace where they reside. When you have a year's worth of paper towels in your pantry, where is the incentive to conserve? A roll runs out, you go down the hall to get the next one.

I buy paper towels one roll at a time. I am always on my last roll. I use maybe 2-3 towels on a normal day. The rolls run out pretty quickly, but I only go to the grocery store once a week, but I never buy a new one, until the current one is out completely. So there are usually 5-6 days for each roll where it is down to the last few sheets, and when that comes I really conserve. I tear off small pieces, or use a sponge instead. I believe that by paying more per-unit I am consuming less, and therefore spending less. For most things I buy, I only buy a little bit, so it always feels like a famine.

I can't but help wonder if focus on the per-unit price is contributing to obesity in this country. Picture a Supersized American pulling up in his SUV to his favorite burger joint. The cashier at the counter asks if he would like to Supersize his meal, resulting in double the size of drink & fries for only fifty cents more. He does a quick calculation in his head, and it sounds like a good deal - maybe 50% more food for maybe 10% more price. Why not? Of course he doesn't share it with anybody else, so he's paying more, and it goes straight to his belly.

You can even see this with gasoline. When it was $1/gallon, people didn't practice any type of fuel savings. When it shot to $4/gallon, lots of people are feeling the pinch, and looking for ways to save, up to and including not driving at all. A lot of people are spending less on gas now that it is $4/gallon than when it was $1/gallon, because they are consuming much less.

The only way to really determine whether the lower unit-price is saving you money is to see how much your spending varies over long periods experimenting with different unit prices and how it affects your consumption. This is time-consuming and difficult. For now, I'm going with my gut, and only really considering the bigger package (with lower per-unit price) when it really is justified.