Tuesday, May 8, 2012

Saving Money By Focusing On Unit Pricing

I love beer! I love it even better when I'm getting a great value on beer. When I'm in the beer isle at my local grocery store, I have the hardest time picking the beer I want for the best price possible because I never want to feel like I'm paying too much. Sometimes I'm lured in by the occasional sale but it's ultimately how much beer I can get versus the amount I pay that ultimately determines the best value. You might see a 12 pack of your favorite beer for $13.99 but then you see a 6 pack of your second favorite beer for $5.99. So which one is the better deal? Typically, the more you buy the less expensive it is.

Some stores already do this for you by displaying the unit price next to the price tag but for the sake of this example, lets say there isn't one. I know a lot of you might know how to figure this out already but for those of you that don't, here is a simple way to figure out which one is the best deal between the two examples above.

The Problem

What is the better deal between these two?
Deal #1: 12-PK/12 oz. - BEER for $13.99
Deal #2: 6-PK/12.oz. - BEER for $5.99

The Math

First, we must figure out how many total ounces they are selling for each deal. The first deal is 12 beer at 12 ounces each so in order to figure out the total ounces we must multiply BEER x OUNCES per beer. The Math should look like so: 12(beers)x12(ounces)=144(ounces of beer). So now that we have the total ounces, we need to take that amount and divide it by the cost to figure out how much we are paying per unit. This math should look like this: $13.99/144(ounces)=0.0972 (price per unit).

If you want to know how much you're paying per beer bottle, you can divide $13.99 by 12 beers which equals $1.16/each beer.

Not bad! Now lets look at deal #2 with the same math.

You take 6(beers)x12(ounces)=72(ounces of beer)
Then you take $5.99/72(ounces of beer)=0.083 (per price unit)
So if you calculate $5.99/6 beers, you re paying $0.99/each beer.

So you figured it out the best deal! Congrats! Now grab two of those 6 packs of your second favorite beer and enjoy! You wallet will thank you.


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