How to determine unit cost

If you’re reading this blog, you already know the importance of considering cost when making purchase decisions. It is intuitive that if two products are comparable, you should buy the one with the lower price. However, if you are only relying on the items looks to determine what is “comparable,” you might be making the wrong choice.

Appealing packaging makes it easy to be distracted by things other than price. Compounding the problem is a lack of consistency in package sizes.  For example, it can be difficult to determine whether the 8 ounce package or 12 ounce package is a better deal.  Instead of guessing, savvy consumers want to know exactly how much product they’re actually getting for their money. This is where unit pricing comes in.

Most grocery stores offer unit pricing right on their tags. The unit cost is normally listed in small print on the shelf’s price tag and is the only price that really matters. It levels the playing field for all of the options and tells you how prices compare based on an equal unit of measurement (pounds, ounces, liters, etc.).

You may not know it, but you're probably already using unit pricing to make purchase decisions. Think about filling up your car with gas. There are two gas stations right next to each other that offer practically identical products. The unit price of gas at the first station is $2.86 per gallon while the unit price of gas at the station next door is $2.93 per gallon. Clearly, all else being equal, it would save you money to buy gas as the first station.

Let’s look at another example. Recently, I went to the grocery store to buy almonds. There were a number of choices including name brands, store brands, and no brand (the option to buy in bulk). There were also a number of ways the almonds were packaged: in bags, cans, and jars of all different shapes and sizes. Some of the almonds were on sale. A quick look at the cost per ounce made it clear which option gave me the most almonds for my money. In this case, the sale items were not the best deal, even though that is how it appeared at first glance. In fact, the sale almonds were almost $2 more per ounce than the regularly priced almonds.

While comparing cost per unit is relatively easy in the grocery store where the number is displayed right on the price tag, it is not always that simple. In fact, you won’t find a unit cost listed for the vast majority of things you purchase outside of the grocery store. Yet comparing unit cost can save you money on many things you buy such as batteries, pet food, and even breath mints! So what’s a consumer to do? The answer is simple: Use a calculator.

Most phones have a calculator function built right in. If you don’t have a calculator on your phone, you probably have one in your junk drawer (I’m not the only one with a junk drawer, right?). Since unit pricing can save you so much money over time, it might even be worth it to buy a small, basic calculator. Once you’ve got a calculator, comparing unit costs is easy.

  1. Enter the price of the first item you want to compare. 
  2. Divide the price by the item’s amount (ounces, pounds, liters, etc.). 
  3. Hit the equal button and voila! You’ve got your price per unit.
  4. Repeat steps 1 through 3 for each of the other products you want to compare. Note: Make sure all items use the same units of measurement (ounces, pounds, liters, etc.).
  5. Make a super-smart purchase decision. In a nutshell, unit pricing strips away the packaging and lets you compare almonds to almonds.

When do you use unit pricing? What other factors do you consider when comparison shopping?

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

  • Better Business Bureau A+ rating Better Business Bureau
    MMI is proud to have achieved an A+ rating from the Better Business Bureau (BBB), a nonprofit organization focused on promoting and improving marketplace trust. The BBB investigates charges of fraud against both consumers and businesses, sets standards for truthfulness in advertising, and evaluates the trustworthiness of businesses and charities, providing a score from A+ (highest) to F (lowest).
  • Financial Counseling Association of America Financial Counseling Association of America
    MMI is a proud member of the Financial Counseling Association of America (FCAA), a national association representing financial counseling companies that provide consumer credit counseling, housing counseling, student loan counseling, bankruptcy counseling, debt management, and various financial education services.
  • Trustpilot Trustpilot
    MMI is rated as “Excellent” (4.9/5) by reviewers on Trustpilot, a global, online consumer review platform dedicated to openness and transparency. Since 2007, Trustpilot has received over 116 million customer reviews for nearly 500,000 different websites and businesses. See what others are saying about the work we do.
  • Department of Housing and Urban Development - Equal Housing Opportunity Department of Housing and Urban Development
    MMI is certified by the U.S. Department of Housing and Urban Development (HUD) to provide consumer housing counseling. The mission of HUD is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD provides support services directly and through approved, local agencies like MMI.
  • Council on Accreditation Council On Accreditation
    MMI is proudly accredited by the Council on Accreditation (COA), an international, independent, nonprofit, human service accrediting organization. COA’s thorough, peer-reviewed accreditation process is designed to ensure that organizations like MMI are providing the highest standard of service and support for clients and employees alike.
  • National Foundation for Credit Counseling National Foundation for Credit Counseling
    MMI is a longstanding member of the National Foundation for Credit Counseling® (NFCC®), the nation’s largest nonprofit financial counseling organization. Founded in 1951, the NFCC’s mission is to promote financially responsible behavior and help member organizations like MMI deliver the highest-quality financial education and counseling services.