Unit price calculator
Retailers rely on the assumption that it is. A larger pack costing more per unit has a name in the pricing literature, quantity surcharge, and it is common rather than exotic: Widrick’s survey of 37 grocery stores found 33.8% of brands priced that way, and in Kim’s peanut-butter scanner data quantity discounts led surcharges only 55 to 61 per cent of the time. Shelf-label unit pricing exists to expose it and is required across the EU, but the directive lets each country pick a customarily used unit, so a 500 g box priced per kilo beside a 6-pack priced per item is still work left to you.
Unit price is the pack price divided by the quantity it contains. On the figures above, a 3.00 pack of 500 g works out at 0.006 per gram against 0.005 for the 5.00 kilo, so the big pack wins by 16.67%. That percentage is measured against the dearer of the two, which turns out to be useful in a way the label never mentions.
How to compare unit prices
The arithmetic is one division, so everything interesting here is about what the division leaves out.
Start with the percentage. The panel says the better option is cheaper by 16.67%, and it gets that by dividing the difference by the higher of the two unit prices. Turn the question round and ask how much dearer the small pack is, and the same pair of numbers gives 20%, because the base has changed. Both statements are true. Quoting one at somebody who is thinking of the other is how price comparisons become arguments.
Dividing by the dearer price has a second use that makes the row more valuable than it looks. Ask what fraction of the cheaper pack you could throw away before the two options cost the same, and the answer is exactly the percentage on screen. A pack 16.67% cheaper per gram breaks even at 16.67% waste; a pack 30% cheaper survives losing 30% of it. Read the "cheaper by" figure as a spoilage budget and the bulk-buying decision stops being a matter of feel. Half a jar of something going hard at the back of a cupboard is not a small leak: on most supermarket pack ladders it wipes out the entire advantage of the larger size and then some.
The larger pack losing on unit price at all surprises people, and it should not. Pricing researchers call it a quantity surcharge and have been counting it since the 1970s. Widrick’s cross-sectional survey of ten categories across 37 grocery stores found 33.8% of brands surcharged at store level, with canned tuna reaching 84.4%. In more recent scanner data for peanut butter, Kim reports quantity discounts running only 55 to 61 per cent of the time, leaving the rest as surcharges. Two explanations compete in the literature and Kim sets them out side by side without picking between them. One holds that it is deliberate price discrimination against households that buy in quantity. The other holds that it is a side effect of temporary promotions: a price cut on the small pack alone flips the ladder for as long as the offer runs. Both are useful to a shopper, because they suggest the same move. If you find a surcharge, check whether the small size is on offer; if it is, the ordering will flip back when the promotion ends.
Unit mismatch is the failure that produces confident wrong answers, and it is partly written into the law. EU Directive 98/6/EC requires a unit price on almost everything and defines it as the final price including VAT per kilogramme, litre, metre, square metre or cubic metre, or per "a different single unit of quantity which is widely and customarily used in the Member State concerned". That last clause is what puts a per-kilo label next to a per-item label on the same shelf, entirely lawfully. The comparison you were about to make between them is not a comparison, and converting one side first is the only fix.
Two more places where the quantity on the pack is not the quantity you get. Tinned and jarred goods carry both a net weight and a drained weight, and the drained figure is the one you eat; two brands with identical net weights can differ by a fifth once the brine is gone. And any product measured in sheets, tablets, capsules or servings is measuring a unit the manufacturer defines, so kitchen roll priced per sheet, detergent priced per wash and supplements priced per capsule are all comparable only within a brand unless you check the sheet size, the dose and the strength.
What people use it for
- Comparing supermarket pack sizes
- Checking whether a bulk deal is real
- Comparing subscription sizes
- Working out cost per sheet, wash or serving
- Turning the saving into a waste allowance before buying the big pack
- Spotting a quantity surcharge caused by a promotion on the small size
Questions
Divide the pack price by the quantity it contains. Use the same unit on both sides or the comparison means nothing.
No. A larger pack priced higher per unit is common enough to have a name, quantity surcharge. Widrick found it in 33.8% of the brands he surveyed, and it reached 84.4% in canned tuna.
Two explanations are argued in the research and neither is settled: deliberate price discrimination against households that buy in quantity, and a side effect of a temporary promotion on the small size that inverts the ladder while it runs. Looking at whether the small pack is currently on offer is what tells the two apart on the shelf.
Against the dearer of the two unit prices. On the figures above, B is 16.67% cheaper than A while A is 20% dearer than B; the same gap, two different bases.
Because the percentage divides by the dearer price, it also equals the fraction of the cheaper pack you can waste before the two cost the same. A pack 16.67% cheaper breaks even at 16.67% thrown away.
Yes. Typical pack-ladder savings run ten to twenty-five per cent, the same order as the amount people throw away from an oversized pack. The saving and the spoilage are the same size.
Convert one first. Comparing a price per kilo against a price per item tells you nothing at all, and a shelf can lawfully display both.
EU Directive 98/6/EC allows a unit "widely and customarily used" in each Member State alongside the kilogramme, litre and metre. Retailers use that latitude, so per-kilo and per-item labels appear side by side.
Under the EU directive it must: the unit price is defined as the final price including VAT and all other taxes. If you are entering trade prices, keep both sides ex-VAT and the ratio is unaffected.
Drained, for anything packed in liquid, since drained weight is what you actually get. Two tins with the same net weight can differ by a fifth drained.
Only when the unit means the same thing on both sides. Sheet sizes, dose strengths and recommended washes are set by the manufacturer, so they are comparable within a brand and unreliable across brands.
Both belong in the decision and neither is in the arithmetic. A bulk pack ties up money and space now for a saving spread over months, which is a poor trade if either is tight.
Work it out here rather than assuming. Enter the multibuy total price against its total quantity as one side, and the large pack as the other; multibuys frequently lose.
No. The comparison runs entirely in your browser.