With some groceries, smaller size is often a better deal
Posted
Jun 04 2009, 07:48 AM
by
Karen Datko
Rating:
This post comes from Trent Hamm at partner blog The Simple Dollar.
One common trap with buying in bulk is the fact that with some products, the higher-volume version often has a higher cost per unit than the smaller version. For example, I recently compared two cans of tuna on the shelf at my local grocery store. The same brand (Starkist) had a 5-ounce can for $1.29 and a 12-ounce can for $3.19. Per ounce, the smaller can cost 25.8 cents per ounce, while the larger can cost 26.5 cents per ounce, making the smaller can the better deal.
This stuck in my head, so I went home and did some research on these price differences.
This feature is called "quantity surcharge," and it's been prevalent at the supermarket and department store since at least the 1970s. Recently, while browsing through the Journal of Consumer Affairs (seriously -- I live not too far from an academic library, and JoCA has lots of interesting material that serves as great food for thought), I came across an older article called "Measurement of Incidents of Quantity Surcharge Among Selected Grocery Products." The article identified 10 specific products where quantity surcharges often occur.
So, without further ado, here are 10 products to study carefully before buying in bulk. I went to the store and tried to find them myself. My notes on what I found follow each item.
Tuna. In the article's survey, tuna suffered from quantity surcharge 84.4% of the time. In other words, the best deal on tuna is usually the small cans, not the bigger cans, as I noticed above.
Ketchup. In the article's survey, ketchup suffered from quantity surcharge 45% of the time. When looking for this, I observed it with Heinz ketchup. I also noticed that a ketchup multipack of smaller bottles was actually the best deal.
Canned beans. In the survey, canned beans suffered from quantity surcharge 40.7% of the time. When I looked for this one, I noticed it in virtually every type of Bush's baked beans in my local store. Most other brands had almost identical prices per unit in all sizes.
Salad and cooking oil. In the survey, oils suffered from quantity surcharge 36.5% of the time. This was perhaps the worst example I encountered. I found a store brand of olive oil in two different sizes, with the larger size costing almost 40% more per ounce than the smaller size. Even a cursory glance at the prices made it clear that the prices were out of whack.
Dishwashing detergent. In the article's survey, dishwashing detergent suffered from quantity surcharge 34.1% of the time. I found this in the store brand of dishwashing detergent. The name brands were cheaper to buy in bulk.
Laundry detergent. In the survey, laundry detergent suffered from quantity surcharge 33.3% of the time. I found that the store brands actually had a quantity surcharge, while the name brands did not.
American cheese. In the survey, American cheese suffered from quantity surcharge 31.6% of the time. Yet again, the store brand seemed to do this, while the name brand did not.
Canned vegetables. In the article's survey, canned vegetables suffered from quantity surcharge 13% of the time. I found only one incidence of this after examining quite a few canned vegetables, and it was the result of a sale on the smaller cans.
Jams and jellies. In the survey, jams and jellies suffered from quantity surcharge 12.1% of the time. I couldn't find different volumes of most jams and jellies.
Syrups. In the survey, syrups suffered from quantity surcharge 5.2% of the time. I didn't find quantity surcharge when I looked around.
What lessons can we learn?
The best strategy is to always calculate the cost per unit yourself -- or use stores that calculate it for you. Many stores give you the cost per unit right on the shelf. If your store does that, use the cost per unit as your metric for making a purchase. If your store does not, you can calculate it yourself easily and quickly with a pocket calculator.
Sales and coupons make this confusing. Most of the time, sales alter the picture, but not always in the obvious way. I saw several incidences of the large and small versions both being on sale, where the smaller version had been a better deal at the regular price and the larger version was a better deal at the sale price. This wasn't clear, either, because the sale tags didn't have the price per unit on them. Again, it pays to be able to calculate it yourself.
Store brands seem to do it more often than name brands. This might just be a quirk of my observations, but I consistently found quantity surcharges more often in store brands than in name brands.
Multi-packs were usually the best deal. Multi-packs of the smaller version of most items were the best deal overall, but that requires you to buy three bottles of ketchup or dish soap at once.
Warehouse stores add to the confusion. I tried doing price comparisons between my local warehouse store (a Sam's Club) and my preferred grocery store. I found that on almost every item I compared, the warehouse club was cheaper per unit than the same brand at the grocery store. However, the brands carried at each were often vastly different, so it's hard to get a full picture.
In the end, though, the key is to focus on the cost per unit. The larger item is usually the best deal, but as you've seen above, it's well worth your time (and money) to pay attention when shopping.
Related reading at The Simple Dollar:
Is renting a vehicle for a long road trip worth it?
Sending money quickly: The pros and cons of various methods
The art of the marinade
