Understanding Grocery Label Unit Pricing

Unit Pricing is simply a tool that allows shoppers to determine the best value between similar products. As well as the price, grocery shelf labels will show a price per unit … a unit being a common measurement such as volume or weight.

An example is as follows:

• An item weighing 1kg costs $3.00 to buy. It’s Unit Price is $3.00 per kilo, or $0.30 per 100 grams.
• The same type of item by another brand is $2.90 for 900g. It’s Unit price is $0.32 per 100 grams ($2.90 / .900).
• Therefore, on a cost per unit basis, the 1kg item at $3.00 is better value ($0.30 vs $0.32)

Let’s have a look at a couple more examples:

The first shelf label shown below shows 800g ‘Brand One’ cornflakes priced at $2.34. Under the price is the Unit Price of ‘0.293 per 100g’ (The price divided by the weight). The 100g provides the basis for comparison.

‘Brand One’ also produces a 1.5kg cornflakes box. Generally the more you buy the cheaper the per unit cost. This is demonstrated in the label below which shows that the Unit Price for this size packaging is $0.281… 12c per 100g cheaper than the 800g box.

However, all we have proved here is that buying a bigger size is cheaper by volume, but the additional actual cost of buying this size may not fit into your shopping budget i.e… spending an extra $1.87 on cornflakes.

Unit Pricing then becomes beneficial when comparing items of similar volume within your budget. This time we compare the 800g (Brand One) with a 700g box (Brand Two). The 700g box is $2.25, or $0.32 per 100g … as the ‘Brand One’ 800g box has a unit price of $0.293 per 100g, then this is considered better value by approx 3c per 100g.

Unit Pricing assists the consumer to easily identify the best valued item based upon a common denominator. Consumers, however, make purchasing decisions based on many factors apart from price alone. For example, a 3c per 100g difference may not be an issue for someone who prefers the taste of one brand over another.