Buying in bulk seems like a sure-fire way to save money, right? The truth is, bulk shopping often will save you money, but you need to look at the unit price and do your comparisons!
Buying in bulk is generally a smart way to shop, because you typically pay much less per unit price.1 You have to stop thinking about purchases in terms of the total cost, and start thinking about them in terms of unit price or price per use.
There are some traps to bulk buying, and if you’re not careful, you will actually end up spending way more than you otherwise might have with frequent, smaller transactions.
Buying in Bulk – Unit price1
When you look at consumables – whether that be food, hygiene products like toilet paper, toothbrushes, toothpaste or soap, you can equate the total cost of the purchase into a ‘per use’ cost.
For example, if you buy a 125g tube of toothpaste for $2.5 and there is enough for 50 brushes, you could say that its cost per use was 5 cents. But what about a ‘Mega’ tube which was double the size but only cost $3.50?
Now the cost per brush has gone down to 3.5 cents. Buying the bigger tube might have cost you $1 more now, but it actually saved you 30% in the long run. By the time you’ve used up your bigger tube you have saved $1.50, or ‘made’ a 150% Return on Investment on the increased purchase cost. This is the basis for why you should buy in bulk, and this mindset is crucial for getting ahead financially.
The reason the shop is able to sell the bigger tube for less is that the supplier charges less. This is usually because they can fit more of the product into less packaging, but also because they are willing to accept a smaller profit margin2 in exchange for moving more product; a process which of course still makes them more money in the short term. Many small packages cost the producer more, and there are more handling, packing, and shipping costs.
Go and check it out for yourself; compare the prices of items at your local supermarket, shopping center, or bulk food stores. The most obvious one is toilet paper; if you compare those ridiculous jumbo packs (if there are any left on the shelves post the COVID toilet paper-gate) to a single pack, you can see the price per roll is much lower.
As you can see from the screenshot above, the 16 pack costs $14.95, which works out to be 93.5 cents per roll, nearly 3 times cheaper than the single pack.
Buying in bulk nearly always works out to be cheaper than buying in smaller quantities, in almost every single case I have found…except maybe stocks – if you buy enough of them, then actually, the price technically should go up with the supply and demand metrics.
Buying bulk groceries is good in theory, but there are a few hidden costs to think about which might undermine your savings;
- You might spend more on a bulk buy than you usually would
- You need to have appropriate space to store your household items in large quantities
- Your bulk products might expire or go ‘off’ if you can’t use them all in time, resulting in food waste.
- You might be tempted to buy things you won’t actually use
- You may end up consuming MORE of the item since you see more whenever you open the cupboards
- The opportunity cost of ‘investing’ in supplies
Buying in Bulk – What CaptainFI chooses to buy
I love buying in bulk, which is probably just something I have inherited from my parents, having grown up in the country and with grandparents who survived the rationing during the war. I tend to stock up on things with very long shelf lives, which aren’t going to expire for years. This way I don’t run the risk of ‘losing my investment’.
I love being able to go to my cupboards, then visit the garden, and have enough ingredients to make a wonderful meal for guests and myself. When it’s just me, I typically use up my bulk ingredients to meal-prep, and then freeze individual servings which make eating quick and healthy a breeze.
If these things are on a FIRE sale and heavily discounted, I have no qualms in picking up hundreds upon hundreds of individual servings or uses of the following kinds of items;
- Dry pasta
- Salt and Pepper
- Canned tomatoes, lentils and beans
- Dried lentils and beans
- Long life unsweetened almond milk (tetrapack)
- Toilet paper
- Soap / body wash* and laundry detergent
- Alcohol (duty free spirits and red wine)
- Seeds for the frugal garden
- Pet food
In fact, buying this kind of stuff when it is costing me cents on the dollar is one of the ways I have been able to keep my cost of living so ‘ridiculously’ low that even the banks question me on my finance applications!
Other things I buy in bulk, but in much smaller quantities are things with shorter expiration dates like;
- Pumpkin, potato and sweet potato: It’s usually cheaper in 5 kilo lots
- Bulk tubs of hummus (500g to 1000g packs): These last a month or more
- Frozen veggies like green beans and peas
- Frozen berries
Otherwise, my regular shop contains items with much shorter shelf lives – which is basically just fruits and veggies (although I am getting lots of lovely fresh vegetables out of my frugal garden these days which helps space the shops out further).
Places to buy in bulk
Of course, the first thing that springs to my mind when I hear the word ‘Bulk’ is CostCo.3 CostCo is a bulk food store that sell things in what could only be described as ‘comically large’ sizes. Need a jar of pickles bigger than your toddler? No Worries! What about a 20L Bottle of Vodka? Also No Worries!
You can see that these last two items might fall into one of the categories in ‘The hidden cost of bulk buying’ since a reasonably sane person probably would never get through this amount of pickles and vodka in a year. You also have to think about what is the risk you might accidentally smash your giant pickle jar or vodka bottle, spilling its pickly and vodkary bounty!
Having said that, I have shopped at CostCo a lot myself; they often sell at wholesale prices and I find they can have a bloody amazing cost per unit on a wide variety of stuff. But it’s not always cheaper than you find in a conventional grocery store – stay woke and do the math. You can check out Product Review’s rating of Costco HERE.4
If you don’t like quick mental math in public, then whip out your iPhone and start calculating – I am a freak though, and I love practicing mental arithmetic or mental dead reckoning as it was always important in my job as a pilot.
Ultimately, I keep an eye out on deals and discounts and tend to really stock up whenever the price is right. If I am doing such a big shop, it might come in at over $350 (in other words 3 months of my grocery money!) and usually necessitates using my clown car to go and haul it all home.
This allows me to use my bicycle and a backpack to simply ‘pop’ down to the local Aldi supermarket and fill it with the weekly specials or fresh produce. 90% of the time, I find Aldi is cheaper per unit price than anywhere else, and I will only ever visit CostCo, Woolies or Coles specifically for their specials on bulk buys or ‘loss-leader’ items.
Summary – Buying in Bulk
Start thinking ahead – plan out your food budget, meals and shopping list in advance and figure out what you can afford to stock up on. Figure out how much space you have and how many ‘supplies’ you can afford to stockpile at home. Then start shopping around for the best unit price and load up!
Just remember to buy only what you know you will consume. There are many financial benefits to buying groceries in bulk5, but it’s also important to reduce waste6, so be mindful of shelf life and your family consumption.
As long as you do it sensibly, and follow the advice set out in this post you shouldn’t have any dramas and you will be able to slash your grocery bills.
Remember – convenience always has a cost, and thinking ahead gets you ahead!
Do you have any tips you can add when it comes to buying in bulk? Let us know in the comments!
- ‘Grocery unit prices’, ACCC, Accessed online at https://www.accc.gov.au/consumers/groceries/grocery-unit-prices on Sep 13, 2022.
- ‘What Should Your Profit Margins Be?’, Dock Treece, Business News Daily. Published: June 29, 2022. Accessed online at https://www.businessnewsdaily.com/11096-determining-profit-margins.html on Sep 13, 2022.
- ‘Costco’ product review, Product Review. Accessed online at https://www.productreview.com.au/listings/costco on Sep 13, 2022.
- ‘Is Buying in Bulk Really Worth It?’, Cynthia Measom, Go Banking rates. Published: August 15, 2022. Accessed online at https://www.gobankingrates.com/saving-money/savings-advice/is-buying-in-bulk-worth-it/ on Sep 13, 2022.
- ’14 ways to reduce food waste at home’, Amy Potter, Choice.com.au Published: August 10, 2021. Accessed online at https://www.choice.com.au/food-and-drink/groceries/fruit-and-vegetables/articles/reduce-food-waste?gclid=CjwKCAjwsfuYBhAZEiwA5a6CDGeutlbQ8zKO8VLxMGm2I4x_ul1oJG1qC9BVKdxrykDobXrM9sbg4xoCuT0QAvD_BwE on Sep 13, 2022.