Is bigger cheaper?

Unit pricing helps shoppers get value for money and make better choices.
 
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01 .Unit pricing

Woman looking at supermarket shelves

Our comparison of the prices of various brands and sizes of everyday items in major supermarkets confirmed what most shoppers already know — it's hard to choose the best value.

This is particularly true for those of us who haven’t the time (or can’t be bothered) to get our calculator out and comprehensively compare the value of variously priced and sized products during our routine grocery shop.

If supermarkets displayed the unit price — the price per litre or kilogram for example — of items choosing the best value would be an easy task.

We called for supermarkets to introduce unit pricing, which Aldi began in November 2007.

Please note: this information was current as of March 2007 but is still a useful guide to today's market.


Stop press!

Supermarkets across the nation will be required to implement unit pricing following recommendations outlined in the Australian Competition and Consumer Commission’s (ACCC) grocery inquiry.

The new pricing system – already used by Aldi since last November — will show a product’s cost per unit of measure. The unit price (for example, cost per kilo or litre) will appear on supermarket shelves alongside the normal ticketed price, allowing easy comparison across brands regardless of product size.

Example 1: When the bigger tin is worse value

Large and small cans of dog foodIn this case, the unit price of the 1.2 kg of Pedigree dog food works out at 22% more expensive than the same product in the smaller-sized tin. How many people would opt for the larger quantity, assuming they’d save money? If supermarkets displayed the price per kg, you’d know their respective prices were $2.21 per kg and $1.81 per kg.

Price Quantity Price per kg
$2.65
1.2 kg $2.21
 


Small tin

Price Quantity Price per kg
$1.27
700 kg $1.81
 

Example 2: Corn flake choices

cornflake packetsThere wasn’t much difference in the 525 g and 825 g packets of Kellogg’s Cornflakes in terms of value for money (around 2%) when we checked. But the 310 g box works out at 38% more expensive than the 825 g box, and if you like those cute little single-serve packets, expect to pay 170% to 600% more for the convenience. Displaying the price per kg would make these realities clearer.

Often, buying supermarkets' own-brand varieties usually results in significant savings (up to 30% or so in this instance if you chose the 500 g Coles Smart Buy box, instead of the 525 g Kellogg’s box, and bigger savings if you chose larger packets).

Unit pricing would make the true costs obvious, helping you identify the premium for a well-known brand name and whether it’s worth paying.

Prices used in both examples were collected in a large Sydney supermarket, December 2006.

CHOICE verdict

  • We want supermarkets to display the unit price (such as the price per per kilogram or litre) for all relevant items. They already have to do this for meat, fruit and vegetables.
  • Unit price displays would save shoppers time and money.
  • It'd also help you spot supermarket sales tactics — such as when bulk buying doesn’t provide the best value.
 
 

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Unit pricing is widely used in some US states and in Europe (it’s a legal requirement in some countries — see International studies for more), but retailers in Australia were resistant to its introduction.

Coles and Woolworths/Safeway gave the following reasons for not previously implementing unit pricing in stores:

  • Lack of consumer demand for unit pricing
  • Opposition from suppliers
  • Extra costs

Coles does, however, show unit pricing on its shopping website.

Consumers in Australia may not have been demanding unit pricing because they weren't aware that it can be applied to packaged goods. We think shoppers will make good use of unit pricing when it arrives, just as they already do when buying meat, vegetables and smallgoods.

Consumer frustration

David Nolan contacted us asking why shops don’t have unit pricing.

“I’m finding myself increasingly frustrated by the way big supermarkets conceal the true pricing of food by varying the quantities to odd sizes, using specials on the smaller-sized product and not the bigger size, etc,” he says.

“I’m beginning to think carrying a calculator around with me would be a good idea. I also think many consumers haven’t the time or can’t be bothered to work out the best price and hence are paying too much. Supermarkets shouldn’t be allowed to make extra profits by obscuring the true price of their goods. You can’t trust the old saying ‘Buy in bulk and save’ in all cases any more.”

03.International studies

 

European experience

Unit pricing is a legal requirement in the European Union.

Prior to the introduction of the mandatory unit pricing in the UK, a survey of 1000 consumers in stores already providing this information found:

  • 77% agreed that all food retailers should have to give unit prices across their entire product range.
  • 61% had used unit pricing at some time.
  • 51% used it frequently.
  • When provided with only the total price and weight for six different sizes of baked beans, just 7% of consumers could accurately calculate the lowest unit price. 
  • When provided with unit price information 78% identified the cheapest option.
  • Providing unit price information reduced the average time needed to identify the cheapest option from 58 seconds to 18 seconds.

Australian study

Ian Jarratt of the Queensland Consumers’ Association has been awarded a grant (Churchill Fellowship) to undertake research on the use of unit pricing in Europe and the US.

“My research has already shown that in the 25-nation European Union (population 450 million) and in several states in the USA, supermarkets must provide shoppers with this information for almost every item on sale,” he says. “Many Australian shoppers don’t work out the unit price of goods because it’s difficult and time-consuming. As a result, often they don’t get the best value for their money, because the unit price varies greatly between package sizes and brands.”

Ian’s report and recommendations were published in mid 2007.