Monday, January 21, 2013

Unit Pricing

When you are shopping for the best deals, do you use unit pricing as part of your expense reducing strategy? If not, maybe you should consider it. This strategy alone could save you tons of cash.

What is unit pricing?
When you purchase a case of individual drinks, like a case of pop, or a multi-pack of dry goods, like six boxes of facial tissues, the entire package is a certain price. The cost of one individual can, bottle or tissue would be the unit price.

If a case of 12 boxes of macaroni & cheese is $6.88, the unit price would be ($6.88 / 12 =) $0.573 each. If you are paying $1.25 per single box, you could potentially save $8.12 ( or $0.68 per box).

This type of price comparison is more important when you have two like products but different packaging standards. An example of this would be bottled water. If you want to compare product A which sells water in a case of 15 X 500mL bottles for $0.88 and product B which sells water in a case of 24 (with a bonus of 4 bottles for a total of 28) X 500mL bottles at $2.44.

An individual bottle of Product A would be $0.88 / 15 = $0.058 per 500 mL.

An individual bottle of Product B would be $2.44 / 28 = $0.087 per 500 mL.

Where this really becomes important is when you have coupons. Lets say you had a coupon for Product B, for $1 off the purchase of a case of 24. Firstly, the coupon qualifies for the purchase because the additional four bottles are a bonus from the manufacturer, if they typically do not sell the product in packaging of 28. You would then be purchasing 28 X 500mL bottles for $0.051 each.

Here's the math:
$2.44 - $1 Manufacturer coupon = $1.44 / 28 = $0.051 per 500mL bottle.

When shopping for items that you buy regularly, you should be inputting the Unit Price into your Price Book (you do have a Price Book, don't you) so that you can compare at a glance what seems like a good deal while you're at the store. If the unit price isn't below or near your set point for cost, you know that it's not as good a deal as it is advertised to be.

Over time, using this tool can really help you to reduce your spending. Just remember to actually 'save' your savings. Put the money you don't spend in your savings account, or RRSP where it can actually do some good, instead of just spending that money on something else.


  1. I find this has become an even more important tool since companies are making product conent smaller but not always changing the container size! Thanks for great reminder.

  2. Ditto Judy - I use unit pricing quite a bit, as you can't go by standard packaging size any more!

  3. Great explanation with great examples! :)