Posted by Mike Smith :: October 10, 2008 @ 9:54 am

Buying in bulk is a great way to save money by paying a lower unit cost. If we allow larger quantities to influence how we consume, however, the savings may be reduced or even eliminated.

Having larger quantities of consumable goods makes an individual amount less valuable. As such, we may be more likely to waste. Eventually sufficient waste ends up costing more than if we had bought our items in more reasonable sizes. In which case would you be more frugal with the amount of paper towels you use: when it’s the only roll left in the house, or when there’s a case of them stored in the garage?

All too often we compare unit cost when cost per time period would be more appropriate. Even though buying larger quantities may lead to a lower unit cost, increased consumption may amount to a higher cost per month.

Consider the following example: although I enjoy eating Macadamia nuts, I don’t purchase them very often because they tend to have a very high unit cost. When I found them for a more reasonable price at my local Sam’s Club, I started eating them more regularly. Though I am getting a better price than I could get elsewhere, my Macadamia nut spending has gone up considerably.

Before you buy in bulk to get a lower unit price, consider whether having larger quantities will also increase your consumption. If you allow your consumption to rise, you’ll be saving less than you think while allowing other detriments (to your health, the environment, etc.) to grow. If you can keep your consumption constant, while paying a lower unit cost, then buying in bulk will maximize your savings.