How can I compare the money saved when buying an item in bulk?
How can I compare the money saved when buying an item in bulk?
Lets say I can buy 200 of something for $20. but for $60, I can buy 750 of them. How can I quantify the money saved as cost per unit?
Besides the math to determine per unit cost, you might also need to consider the opportunity cost of having so many.
- How long will the bulk supply last?
- Is it something you will get tired of having?
- How much space does it occupy?
- Is it perishable?
- Will it expire?
...
Is it perishable? Will it expire?
used to work at Sam's Club in highschool (yeah. it was awful then. I suspect it's more-awful now). What people don't want to know? those big ginormous tubs of mayo? they go bad rather quickly. Not like, rancid bad, but they're definitely not as fresh or as worthwhile.
Also the rotisserie chickens, bakery and meat are loss leaders to get you in the door. everything else they're making huge profits on. Especially everything that's at the front of the store- the bulk candy, the electronics, the seasonal things. those god awful t-shirts and disgustingly cheap tube tops.
never by mayo in bulk. Also never buy the nacho cheese. Nobody needs a gallon-can of nacho-flavored valve sealant. just. trust me on that.
Bulk mayo makes sense if you’re a restaurant or cafeteria or running a summer camp or something like that. Probably not for many other people.
Nacho cheese doubles as a personal lubricant.
You just said "will it expire" three different ways, man
- Will you really use that many?
I used to buy engine oil and filters in bulk, then car needed to be totaled. Difficult selling oil as a private.
Is it easily repairable?
What's the percentage of new stock being faulty already?
$20 / 200 items = $0.10 per item $60 / 750 items = $0.08 per item
So your savings are $0.08 - $0.10 = -$0.02 per item.
Ah, another math nerd that isn't asking what the item is or how much it costs to ship back defective items.
There's no such thing as mass produced items that don't have some percentage of defects. Like, what's the insurance policy on the items? Who pays for return shipping when defects are returned?...
There's more to it than a pocket calculator can answer.
"That is correct, but also take into account that defect and return rates may behave differently when buying in bulk. Here's an explanation..."
You can insert the same point in a constructive way without shitting on someone for answering correctly and helpfully.
I am not a "Math Nerd©" but even I know that what the item is doesn't matter to answer this question. The question is about how to compare what the savings are per item bulk vs individual. It could be cars or bananas, what the item is is not important to the question. The question is asking for formula by example, not for someone to do their example math problem and return an itemized price sheet.
Returns and defects can effect savings per item, but the question does not include a clause that requires this calculation. Since the question does not mention it, it can be assumed OP was asking about savings before any defects or returns are made. This is not a net savings question, it is a gross savings question. Gross savings of course being the savings before any modifiers such as sales or import taxes (which are also not mentioned and therefore rightfully ignored by the person you attempted to "correct"), or in this case, defects and returns.
Division.
Divide $20 by 200 gives you $20/200 = $0.1 = 10¢
Dividing $60/750 gives you $0.08 = 8¢
this is basically the start point and at relatively close scales will work pretty well.
this can also be expressed as a 2 in 10 (20%) bulk discount.
you can add on adjustments if you can estimate other factors like the admin cost (of your time) per transaction, a defect rate cost or spoilage, cost of storage and transportation and so on.
These overheads can sometimes be shared across other products, especially transport and storage.for longer term stuff you might want to translate this into an equivalent annual (or longer ) cost per year/day of consumption that covers expected consumption with your safety margin.
if you need to account for every element of you cost base to the nearest penny then it can get pretty complicated - but if you're prepared to make simplifying assumptions like:
"It doesn't spoil over time",
"I already have some unused space",
"i don't need insurance on storage.",
"i'm going to ignore any adjustments lower than 0.001 cents per unit (a materiality threshold)"Whether those assumptions are a good idea or not, depends upon the wider context.
You must be living in a perfect world to use math to answer this question. You're assuming defective products don't exist...
Divide the cost per unit. In your example 200/$10=$0.10 per item or ten cents, but the alternative is 750/$60=$0.08 or eight cents per item.
You need to also consider things like storage costs, how much it costs you to maintain, and whether it'stoo much for you (which lemmy can't help you with)
Total Cost of batch / quantity of items = cost per individual item. 20 dollars /200 items =10 cents per item 60$/750item= 8 cents per item. It will be helpful for you to let this equation roll in your brain for a bit and try to understand why it is true maybe.
Geometrically the same exact idea can be visualized. you can think of total cost $ being the length of a line segment, and the quantity of items as equally split portions of that line seg. If you have a total cost of 1$ (a line seg with length of 1) and get two items, the cost of each item is 50c, or the line will be partitioned equally in two exactly In half. If you had three items the line would be split into thirds and so on.
As others mentioned, it's simple division. But to properly compare, you have to take into consideration the "units" in which you're dividing.
E.g. if you're buying crayons, you can compare the # of crayons to the price. But if you're buying chicken breasts, you can't really compare the # of chicken breasts, but rather the ounces (or, whatever measurement of weight).
For cost per unit, you divide the cost by the number of units. $20/(200 units) = $0.10 per unit. $60/750= $0.08, so 2 cents cheaper per unit.
But if you actually only need 50 but can't resist a "good deal":
The 200 cost $0.40 per item that you actually need, the 750 cost $1.20 per item that you actually need (plus the cost of storing and at some point throwing out the ones you don't need).
Division.
200/20=10 per $
750/60=12.5 per $
200 for $20 is $0.10 each (200 for 2000 pennies) while 750 for $60 is $0.08 each (750 for 6000 pennies) so you save 2 cents per item. Or you got 150 items for free by buying the 750 pack.
150 free items is the key part here. That’s all you need to know.
I look at it like a discount. It's 20% off. My wife can get mad when I buy things cause they're on sale from Sam's club. Not perishable stuff, but like soap or deodorants or canned goods. If something is on sale for $8 that's normally $10, I'm getting a 20% discount on it. Or it's like an investment. You'd be crazy not to invest money in something that was guaranteed a 20% return in less than a year.
cost per unit
This right here answers your own question. The word "per" implies division in math. Cost per unit = cost divided by units. If cost is $20, and units is 200, that means you have $20 / 200 = $0.10.
Similarly, 150 miles per 2 hours is 150 miles / 2 hours = 75 miles / 1 hour = 75 miles per hour
Other math vocabulary hints: and means addition (3 and 5 is 8) and of means multiplication, typically with a fraction (half of 6 = 1/2 * 6 = .5 * 6 if you prefer = 3