Be careful about buying in bulk. It can easily bring about unintended consequences.
There are a few good reasons to in bulk.
First, by purchasing larger quantities you need to replenish your supply less frequently. That’s convenient.
Second–and more importantly–you can usually get a better deal by buying larger quantities. We sometimes see this on the store labels as the unit price.
For example, you can buy a 8oz jar of salsa for $1.89 or a 16oz jar for $3.59. The larger jar is a better deal. You’re paying less per ounce. Economies of scale are working in your favor, right?
If I really want to go crazy I can get a half-gallon for $7.25. About 4 times as much salsa for just a little over double the price. Score!
What could go wrong?
Why would anyone ever buy anything other than the largest quantity they would consume before it spoils?
Consumption rate. That’s what.
If you love salsa, a gallon of your favorite salsa sounds awesome. You can put it on everything: scrambled eggs, salads, a midnight quesadilla. In the frenzy it’s easy to consume more because you have more.
You used to buy a 16oz jar every two weeks. Now you go through almost a gallon per month. The salsa manufacturer wins. (Your taste buds win, too!) But… you’re now spending more money on salsa than you used to.
The Bottom Line
Just looking at unit price can trick you. You think you’re measuring perfect apples to apples. But unless your consumption rate is constant, saving a few pennies per ounce may be doing more harm to your budget than good.
Be careful buying consumables in bulk. You’ve got to keep your consumption rate in check to stay ahead.
About the Author
David Larsen is the Co-Founder of SpendLight. When he's not busy writing software, he loves to help people become better spenders.