Warning: You are entering the rant zone. I’ve been holding it in for a long time and I just can’t take it any longer.
Regular ESI Money readers know that I am a regular podcast listener.
I’ve added a few more to iTunes since I wrote Lessons from a Real Estate Expert and asked for suggestions. One I picked up was NPR’s Planet Money, which I am enjoying so far.
But in a recent episode they made a comment that made me cringe. I had to rewind the episode and listen again because I was sure I heard it incorrectly. But I hadn’t.
It’s the sort of thing I hear/read quite often from media folks who write/talk about money but really don’t know much about actually managing it.
Buying in Bulk is Always Cheaper
The episode was called The Anti-Store and was about the beginning of Price Club, how it merged with Costco, and the success they are having.
In the middle of the show, one of the commenters said this:
“Buying in bulk is always cheaper, we know that part.”
Uh, no. We do not know that part. The reason we do not know it is because it is not true.
Here are some posts that tell why it is not true:
- Money Saving Tip: Calculate the “Per Use” Cost
- Be Wary of Warehouse Clubs
- Don’t Assume Quantity Purchases Are Always Best
But if you don’t want to read those, here’s the bottom line:
Do not assume that it’s always cheaper to buy the larger size — many times it is not. You MUST calculate the per unit/use cost.
Now you all know that Costco is one of the brands I love, so this post isn’t a diatribe against them. It’s just a recognition that Costco does not always have the best prices, especially since many other retailers allow you to stack multiple discounts and Costco often does not.
For example, Costco may have a GREAT price on an item with a cost of 50 cents per ounce.
The regular grocery store cost may be 75 cents per ounce, but after a sale price and coupon, could be 45 cents per ounce.
Or sometimes it’s just that the smaller-size ketchup at Walmart is cheaper per ounce than the larger-size ketchup at Costco.
Club stores sometimes play off the fact that people assume buying in bulk is ALWAYS cheaper, so they price their stuff a bit higher. Consumers think they are getting a good deal and buy there, never knowing it’s not the best deal.
So you always have to know your prices and check the per unit cost. BTW, Costco lists the per unit costs on their price signs as do many grocery stores.
The sad thing is that most of you reading already know this. This is basic budgeting/spending 101.
What is even sadder is that a money “expert” does not know this.
Why is that? Because most of the people writing and talking about money in the mainstream media are not experts — at least with money. They are experts for sure, but they are experts in JOURNALISM, not money.
That is why they say things like “Buying in bulk is always cheaper, we know that part.” Because they lack the basic money knowledge that most ESI Money readers have. They know how to put on a show or write an article. They do just enough research to sound like they know what they are talking about. But they really don’t as evidenced by comments like the above.
Now you may say that the comment wasn’t that big of a deal, especially because many people would say that buying in bulk is USUALLY cheaper. So what’s the big difference between USUALLY and ALWAYS?
Uh, it’s wrong. That’s the big deal. Even bigger is that we have someone holding himself out as a money expert and he doesn’t even know the basics. Heaven forbid he starts dishing out investment or retirement advice.
Another problem is that this sort of stuff is widespread in the mainstream media. They regularly say/write things that are not true or show that they do not understand how money works. I talked about that in What Makes ESI Money Different. I’m so fed up with this sort of stuff that I’m creating a new category here called “Not Experts”. I’ll post on this category now and then when I find mainstream media who are saying things the rest of us know is hogwash.
Whew. I feel better now.
You are now leaving the rant zone. 🙂
Agree. I found that out early on in that you need to know your prices and what is costs somewhere else. Sign of the times in that we are lazy in thinking buying in bulk is cheaper and we don’t want to do math.
I like Costco for various items in that the quality is better. I know I can get chicken cheaper else where when on sale but there is something that is done with that sale chicken. Pumped up with “natural juices” so when cooked it tastes like a rubber chicken and not chicken. Now you need to read the labels in the last time I got chicken it was a different package and I did not like it. So sometimes you get screwed in buying a big bulk of something that is not the best which is really not cheaper.
I think there is a surprising amount of nuance on this topic. I always compare sale + coupon versus store brand. For example, I don’t care about name brand paper towels and any time I buy them they are cheaper then name brand w/ a coupon. But of course I still check 🙂
I also think a catch is expiration. It may be cheaper to buy something in bulk, but if it expires what’s the point? It’s just me and the wife, so I have to be careful about any large quantities of food items.
I’ll take that one step further – to a point I could never get my mother to understand: it’s not even the cost-per-volume, it’s cost per volume USED. Buying the two gallon jug of mayonnaise, then only using ten ounces before it expires and has to be thrown away, IS NOT cheaper than buying the full-price 10oz jar at the grocery store. She also always had a vast collection of freezer-burned meat that was *such* a great value.
This can be extrapolated to other stuff as well. How many people do you know that own an expensive suit they wear once a year to weddings and funerals, while they buy cheap discount store business-casual cloths that they wear to work every day of the week (and are used up at 18 months)? It’s not cost per item – it’s cost per times it’s worn that matters.
Bruce Stott says
So true! A couple other examples of this are paper towels and canned tuna fish. The “cheap” paper towels require more sheets than the “expensive” paper towels to clean up messes. Also, at some point my standing there and calculating becomes a cost that must be taken into account. My solution is to buy the best deal of the quality paper towels available.
The second example I have is canned tuna fish. When I first moved out on my own thirty-some years ago I made the mistake of assuming that the bigger cans were cheaper than the smaller cans. When I took the time to calculate the cost per ounce, I was surprised to see that the smaller cans were cheaper. It is almost always true. I guess it has something to do with volume pricing of a different sort.
K D says
On a tangent, I just talked with an acquaintance today. She told me that she is working a lot of hours because she wants to pay off her mortgage, despite “everyone” telling her to keep it for the tax break. I applauded her choice and told her she won’t regret that move.
I agree that it is often cheaper to buy with a sale and coupon than to just blindly buy in bulk at a warehouse club.
My biggest pet peeve is when people think that those that spend a lot of money are rich. They may have good income but what is their net worth?
I love your new category of posts.
I agree. When I was in college I did a term paper on grocery shopping. What a learning experience! Figuring the price per unit as well as the odds you will use it before it goes bad is one of the things I learned. It was also during this time I was into canning. Since that went along with groceries, I did some investigation into why it was hard that year to find canning lids. I found out that ONE company had bought and provided ALL the lids that year and the company was one who canned foods! So naturally they wanted to make people buy their canned foods buy making the lids scarce. It back fired. People began to freeze their foods they normally canned instead. After that, lids have not been a shortage.
Yep, I’m also a Costco member but not everything is cheaper there. For us, they have several cheaper prices on some name brands we use and we love their large $5 rotisserie chickens. But some items are simply cheaper (on volume and by use) at Aldi’s and Krogers. Like you said, the cost per ounce on that sort of stuff is listed right on the price signs at all 3 of those places.
Mike H says
Don’t buy in bulk items that you don’t want to over consume. Milk, ice cream, peanut butter, chocolate and snacks all come to mind. And don’t buy perishable items in bulk unless you like eating nothing but strawberries for a few days.
Mustard Seed Money says
My wife and I decided not to get a Costco card because we found that we didn’t shop there nearly as often as the sales at the local grocery stores. It’s amazing what happens when you shop around a little bit and how much you can really save!!!
I so totally loved this. In my profession I am a numbers geek and for a hobby I am a frugal shopper. This too drives me crazy.
In fact I regularly take my calculator when shopping because many stores display a different unit price to throw you off(not Costco).
For instance today I was looking for the best price on Romaine lettuce at the grocery store. For the 3 pack they showed the price per ounce. On the 6 pack they showed price per unit. So I pulled out my calculator and discovered the 6 pack was indeed cheaper. Many times, however, I found that not to be the case.
I adore Costco but we have narrowed done our items to buy there to just 3 items, our membership is still worth it on those three…..but you already guessed I ran the numbers for this too?
I’m dying to know which three!!!!! 😉