Conventional financial wisdom says buying in bulk is smart. When you buy en masse, the price per unit tends to drop. So the thinking goes, if you buy more, the less each unit winds up costing you. Seems simple enough, but like anything financial, thereâs a bit more to the story.
Itâs worth doing a deep dive on buying in bulk. What do you need to know, what mistakes should you avoid, and do you really save money?
The Pros of Buying in Bulk
Who isnât looking for ways to save money? A firm financial foundation starts with saving. While the big deal is the potential for saving money on the cost per item, there are other reasons to shop in bulk.
For one thing, itâs typically more socially conscious and environmentally friendly because bulk purchases usually have significantly less packaging per use than smaller purchases have. (Envision a mammoth pickle jar or tub of frosting.)
Ideally, buying in bulk also means you shop less, and thatâs less time spent on the road and burning gas.
Then too, who knows what additional savings you might rack up just by being in the store less frequently and having fewer opportunities to pick up things that werenât on your list?
If youâre the organized type who is big on preparing meals in advance, cooking lots of food and freezing it, buying in bulk can make that endeavor easier.
For sure itâs cost efficient to prepare your familyâs favorite pasta dishes and soups and have enough for today and whenever youâre ready for round two, or three.
Finding the Price Per Unit
This is one time you need to do the math. To capitalize on a bulk buy, determine the cost per unit. What is a unit? Think measurements like ounces, square feet, grams, and gallons.
A bottle of olive oil is not a unit. A fluid ounce of olive oil is.
A roll of paper towels is not a unit. A square foot of paper towels is.
Figure out how many units you are buying. Take the total cost of your purchase and divide that by the number of units.
Then compare the unit prices of a few packages of the same product to determine which is the better value.
Ideally, the cost per unit of a bulk buy should be at least 50% below what you would normally pay.
Although a supersized item usually has a lower cost per unit than its smaller brethren, crunch the numbers to see.
How Much Can You Save By Buying in Bulk?
study from Dartmouthâs Tuck School of Business found that people shopping at warehouse clubs were spending more on packaged food, making more shopping trips, and taking in more packaged food calories than if they didn’t shop at a club store.
fun way to save money, but donât get so giddy grabbing great buys that you forget important things like expiration dates. Products like bleach and sunscreen expire in 12 months or less.
Be sure you can use what you buy before you have to throw it out. Another option is to buy, share, and split the costs with your friends. That avoids waste and saves money for all involved.
Buying in bulk has its advantages. You can save money, but youâll need to be savvy. Buy only what you need and what you can use in a timely fashion.
Like all shopping, but particularly in warehouse stores, temptation is everywhere. Itâs best to know how to compare cost per unit and to have a list.
Speaking of planning, track your spending with SoFi MoneyÂ®, a cash management account that has no account fees or monthly fees.
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