Unit pricing – comparing costs and value

Most laws Trading Standards enforce are about ensuring:

  • consumers have certain information
  • the information consumers receive is accurate
  • products are safe

Trading Standards laws generally do not get involved in cost or value. What I mean by that is that we have a free market in the UK and it is generally accepted that a business and a consumer can agree to buy/sell goods at a price that suits them both. As long as you are given certain information and that information is not misleading – it is up to you to decide whether to buy something at a certain price.

Unit pricing is something that assists consumers in comparing the costs of goods to try and determine value. Displaying prices of goods is governed by the Price Marking Order 2004 – this law generally requires shops to put prices on or near goods and in certain cases provide a unit price. A unit price will usually be a price for each kilogram or litre so the consumer can compare the costs of two different products.

There are some that argue that legislation like this puts a burden on business and makes operating a business more expensive. I can see the reasoning behind that because obviously there is a cost to providing that information and in theory people can work out unit prices themselves (if they have the time, tools and know how). That said, this law is about making things easier for consumers to make quick decisions. Of course we could all go round a supermarket making calculations ourselves but in real life this is not always practical (I also suspect the supermarkets don’t want people clogging up the aisles doing so). It is not always easy either as shown in the example below.

An example of unit pricing

I needed to go to a supermarket to buy some washing liquid. It is an item that I tend to buy in bulk because it is something that will always be needed and it lasts a long time. I usually use Fairy. The supermarket I went to was Tesco.

‘Value’ will mean different things to different people. For example, if Tesco washing up liquid is cheaper than Fairy, it might be ideal for some but others may prefer Fairy because they feel it is a better product and worth the extra cost. We all value things differently. I tend to buy Fairy just because it is what we have always used.

There were three Fairy products on sale of differing sizes – I will call these small (500ml) medium (780ml and large (1150ml).  Two of the Fairy bottles were also on special offer – small (500ml) medium (780ml).

Picture showing price labels for the three Fairy bottles
Shelf edge labels for the three Fairy bottles – click on image to make it larger

I was happy to spend £2, £3, £4 and so on as long as I got the best value and the minimum quantity that I wanted (at least 1 litre).

Firstly you will note that the large (1150ml) did not have a unit price (it should do) and I made a schoolboy error in discounting it straight away as I stupidly (like most people I suspect) thought that the ones on offer would be cheaper per litre.

Now I did want to work out what the cheapest was per ml (there are 1000ml in a litre). The unit price for the two Fairy bottles on offer is given for the non-special offer price. In order to work out the unit price for the special offer you have to calculate it yourself. The law does not require unit pricing for special offers. The problem is that unless you have paper and a calculator handy you need to work out two new prices and remember all four of them so you can work out the best value. It is made more difficult by the fact the quantities are not sold in round numbers.

I did some quick sums in my head and bought two 500ml bottles for £2.

I’ve now done the sums at home as in the table below.

Table showing unit price calcualtions for the three Fairy bottles
On the left are the three bottles with price per litre – on the right is the price per litre for the two sizes on offer. Click on image to make it larger.

Some specific points to take away

  • The large bottle is still cheaper per litre than the small and medium even when they are on offer – and is the one I should have purchased
  • Before the special offer, the medium is quite a bit cheaper than the small – 50p a litre cheaper. After the offer, the gap is only 8p a litre and for some that may be enough to just spend £2 on two small bottles than £3 on two medium bottles.

Some general points

  • Unit pricing can help work out best value for goods that have different quantities and prices
  • It does not apply to special offers – which is not helpful
  • Just because something is on special offer does not mean it is necessarily better value than the same product in a different size not on offer
  • It can be hard to work out the unit price when the quantity is not in rounded amounts (i.e. 780ml and 1150ml).
  • Manually calculating unit prices would be very time consuming – particularly when there are special offers on

Leave a Reply

Your email address will not be published. Required fields are marked *

*