The reason why comes down to that item's unit price for its different sized packages - how much it costs for a given standard quantity. For example, we could buy a 34 fluid ounce package of ultra-concentrated Downy fabric softener for $7.83 from Amazon, which works out to be $0.23 per fluid ounce.
Or we could buy a 6-pack of the same bottles of fabric softener from Amazon for $36.76, which drops the unit price for the exact same item down to $0.18 per fluid ounce, making it a potentially better deal.
We say "potentially better" because there are other things that might make the same item in a smaller size more desirable. For instance, we might not have adequate storage space for a 6-pack of 34 fl. oz. containers (204 fluid ounces in all), which would make having more than one a real inconvenience. Or in the case of perishable goods, like those ginormous containers of mayonnaise that you see at warehouse club stores, the contents of a bigger container might spoil before we can use it all, which would mean that our money would go to waste as well.
And speaking of money, we may have some budgetary issues in that we might have $7.86 available to buy the smaller container, but not $36.76 to buy the greater quantity. That's not so much to say that we don't have $36.76, but more to say that we'd rather spend the difference on something other than making our fabrics softer.
We'll test that idea in the tool below. Here, we'll plug in our Downy default data, then consider what happens when we have a coupon that provides a $1.00 savings per package, such as we might find on the Downy promotions web site. Would it still be more economical to buy the greater quantity? We'll answer below the tool, which can easily be altered to consider whatever product cost and quantity comparison you might actually want to do....
For our fabric softener example, with the $1.00 off coupon, we find that the 6-pack is still the better buy, as it saves 2.6 cents per fluid ounce over buying the single 34 fluid ounce container. But without the coupon, the 6-pack is an even better buy, saving 5.0 cents per fluid ounce over buying the single container.
Having closed the gap by that much, we wondered what kind of coupon discount it would take to make the smaller container have the better unit price. Playing with the tool, we found that a discount of $2.05 marked the point where the smaller package would have a slightly lower unit price. More than that amount and it would be the better deal.
While that's an unlikely amount to find printed on a coupon, you might get pretty close to that number if the store where you might buy the item you're purchasing is one that doubles or triples the face value of coupons as part of a sales promotion.
It's no wonder that so many different coupon services have taken off in recent years!
Labels: personal finance, tool
Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:
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