1. Evaluate a Purchase
b. Know the importance of quality and quantity and how they can affect price (continued)
Although you may not be able to take this much time thinking through all of your buying decisions, you can do some of this in your head. Next time you’re shopping for a new pair of shoes, think about how you’ll use the shoes and how long you want them to last and then look at how they’re made and what materials they’re made out of. You may decide that you need to buy a more expensive pair of shoes because they’ll last longer or will work better, but you may also find that the less expensive pair will work just as well. The important thing is to make informed buying decisions.
Like quality, quantity needs your good shopper skills. Everyone knows that if you buy in bulk—large quantities or numbers of products—you save money, right? Not necessarily. Like comparison shopping, retailers have learned that smart shoppers want to know the unit price when they buy something. Unit price means the cost per item purchased. For example, if you buy a pack of gum with 10 pieces in it for $2.00, you pay 20 cents per piece of gum. The unit price is 20 cents. If you buy a pack of gum with 10 pieces in it and pay .99 cents, the unit price is 9.9 cents. Obviously a better deal!
To get the unit price of an item, you divide the total price by the number of pieces or ounces or pounds or sheets or whatever unit in which the product is sold.
Unit Price = Total price for the product
Number of Units
Most grocery stores, for example will show the per unit price on their shelves below the product. Here is an example:
Always compare the unit price among products before deciding what to buy. If you have one, you can use your calculator on your cell phone to do this. You will find that bigger quantities aren’t always cheaper and that often the store’s generic brand offers the best per unit pricing.
Also, ask yourself if you will really use/need 20 rolls of paper towels even if the per unit cost is less. Tying up your money in a year’s worth of paper towels is not always the smartest way to spend it. The budget sheets in the Money Management course will help you decide how you should spend your money.