Money Saving Tip: Calculate the "Per Use" Cost

Here's a simple yet effective money saving tip that I was reminded of on a recent trip to Wal-mart:

Be sure to calculate the "per use" cost of items you buy. Do not assume that it's always cheaper to buy the larger size -- many times it is not.

When I was a kid, the "rule" was that larger size items always cost less than their smaller-sized cousins on a per use basis. So a 20 oz. product of cereal might be $0.10 per ounce while a 30 oz. product of the same cereal might be $0.08 per ounce. This made sense for all -- the product manufacturer saved on some packaging and shipping costs, the retailer got a higher total price (even though it was less on a per ounce basis, the total cost was still more of course because of the higher ounces), and the consumer saved money (as long as you knew you'd use it all, it was a good deal).

Then marketers realized that consumers started seeing this as a "rule" and started getting sneaky. They'd price a few of the bigger items at the same cost per use as the smaller ones -- or maybe even a bit more. As they saw that consumers weren't catching on (they weren't seeing that the bigger products were actually more expensive), the manufacturers/retailers began to raise the prices on more and more bigger items.

Case in point: my recent trip to Wal-mart to buy shampoo. Here are the stats on two different-sized bottles (same flavor) of Suave shampoo:

• 15.0 ounce bottle -- $0.90 cost -- $0.060 per ounce
• 22.5 ounce bottle -- $1.47 cost -- $0.065 per ounce

First of all, we're not talking major amounts of money. 22.5 ounces at the lower-sized price-per-once would be $1.35, so you're only paying $0.12 more. So we're not talking the end of the world here.

But looked at another way, that $0.12 means you're paying 8.9% more for the 22.5 ounce size as you would for 22.5 ounces at the 15 ounce rate per ounce. How would you like to pay 8.9% more for everything you buy? Wouldn't be too happy, huh? Me neither.

This sort of pricing really irks me -- and I'm disappointed to see it from Wal-mart -- but we have to be on guard. This sort of pricing game is happening more and more nowadays, so be sure you check your per use costs if you truly want to get the best deal.

Comments

[Blaine Moore (First Time Homeowner)]

I've seen this on almost anything you care to purchase. I've been very careful lately about comparing the "per use" when I go shopping.

[Golbguru]

FMF, that is thoughtful. Here is a link to a similar thought I had during the last thanksgiving : http://golbguru.blogspot.com/2005/12/true-cost-of-things.html

Cost "Per Use" = True Cost

[mbhunter]

This is the kind of info you SHOULD be able to get from the unit costs on the shelf tags below the product, BUT:

1) You might have to hunt for the tags a little (the items sometimes are stocked well away from the tags)
2) The units might not be the same! (Sometimes this happens when comparing brand names with generics.)

Only way to be sure is to calculate it each time.

[David]

A very good tip that I'll use in the future, but I have to know - what kind of "flavors" of Suave do you buy? And which tastes better?

Thanks!

[Debt Free]

I'll back you up on that. I was buying cereal on Friday. I always check the cost/unit, but I started with the huge "Bargain Bag" size. Imagine my surprise when I found that the smaller, 16oz size was nearly 20% cheaper per oz! Needless to say, I bought the smaller sizes. It was the same for all the cereal of that brand (Malt O' Meal) but the difference varied by cereal type. The store was Winco Foods, a great warehouse type supermarket.

[FMF]

David --

I like green apple and strawberry. Wouldn't you call those flavors? ;-)

[beloml]

The same goes for the price paid for things like clothes--cheapest isn't always best. It's better to buy quality products and wear them many more times. The cost per wear (initial cost divided by the number of times worn) gives the true cost of a garment, purse, coat or pair of shoes.

[Steph]

Also, many times you get a better deal if you are couponing on a smaller item than a bigger item. Love the website!