Grocery unit pricing helps you assess value, regardless of the brand and it’s packaging.
Grocery unit pricing should be compulsory for all supermarkets in Australia. It is the easiest, clearest and most concise way to assess the value of a product based on quantity and price.
The unit pricing is often found on the lower half of a shelf price or ticket at the supermarket. It gives you a breakdown of the product on a like for like basis so you can easily compare to other products nearby. It allows you to assess value regardless of brand, packaging or quantity without pulling out a calculator.
How grocery unit pricing works
By way of example, you want to buy a jar of coffee. The Moccona brand you like has three different sized jars; all containing the same coffee. How do you assess which one you should buy to save the most money? Grocery unit pricing.
Each jar of coffee will have a per unit price. In the case of coffee, it will give you a dollar cost per KG of coffee, as it is measured by weight. While the jar may not contain a full kilogram of coffee, it will allow you to break down the price on a single metric across all three products.
This will tell you quickly which of the three product is the best value.
- Coffee jar (500g) = $7.50 = $1.50 per 100 grams
- Coffee jar (750g) = $9.50 = $1.27 per 100 grams = better value by 23cents per 100 grams
How unit pricing breaks down the cost
Further to the above, grocery unit pricing will give you a cost per litre for fluids, per sheet for paper towels and toilet paper and a per kilogram price for many other products like meat, canned goods and more. The cost could also be in mL or grams, all of which are easy to comprehend as you can pick up one item, compare it to another and choose the best value.
The best value versus cash flow argument
Grocery unit pricing will help you assess the best value product, though it won’t help you manage your cash flow.
Quite often we get the cheapest unit pricing by buying in bulk. This means you may spend more to save more, referred to affectionately as spaving.
While you may ‘technically’ be saving money in the long run, consider whether you will actually use the amount you are buying and whether your cash could be better invested elsewhere (instead of in 122 toilet rolls stored on top of the cupboard).
Grocery unit pricing looks at value, not necessarily quality
It must be noted that just because something is the best value from a ‘trying to save money’ point of view, it doesn’t mean to say that the product is necessarily the best. Take for instance a pair of shoes; they may be cheap, though if they break after a few wears, wouldn’t it make sense to buy the better quality ones? Regardless of their price?
Remember, the best value is in the eye of the beholder and can mean many things.
Supermarket specials can alter your perceived understanding of unit pricing
Quite frequently a supermarket will run a once off runout sale on particular items. They may be overstocked or holding too many of a particular item that is nearing expiry. When this happens, they reduce the price to get people to buy.
If you are a loyal grocery unit pricing practitioner – you may have preconceived ideas of which product is always cheaper. My suggestion is that you never assume; always check the unit pricing as sometimes the small products offer greater value and vice versa.
Unit pricing and ‘spaving’ to the extreme
Supermarkets like Costco offer your everyday products, in such big volumes, that they become almost a commercial quantity (which is why so many restaurants use Costco, it’s the new Cash and Carry type store).
The savings at supermarkets like Costco are quite large, though you are in turn required to buy large volumes. If you do find yourself trying to use unit pricing as a savings measure at Costco, the best way to do this is to buy products and split the bill and products itself with a friend or family member.
You get the lowest possible unit pricing without having a metric tonne of any one product. It also significantly free’s up your cash flow as money can be better spent elsewhere.