Save at the Supermarket: Boost Your Price Power!

On any trip to the grocery store, it's the first and simplest question: what's the price?

Time was, it was easy to know the price of any grocery item; before computers, each can, carton and bottle sported a physical price tag.

Old-school physical price tags made food costs clear--and to raise prices, grocers had to re-tag food items.

This labor-intensive process discouraged wide swings in pricing. Shoppers knew what food cost, and it was easy to notice rising prices.

Hello, 21st century! In today's supermarket, finding the price of any item is no longer so straight-forward. What's a savvy shopper to do?

Today's computer-powered POS systems allow grocery stores to change item prices with a few keystrokes at the home office. Last week's $2.49 bottle of salad dressing? Today, it'll cost you $3.69!

This ability to reprice groceries on the fly has led to a perfect storm of supermarket promotions and price manipulation, all designed to do one thing: make it difficult to know how much food really costs. These pricing games are intended to obscure the true cost of groceries, and to trick shoppers into seeing bargains where they don't exist.

That $3.49 bottle of dressing? Well, the "club card" price is $3.29, and this week, if you buy $10 worth of the manufacturer's products, you'll earn a coupon good for $3 off your next shopping trip. Add in cents-off coupons, factor in store rewards .... and you'll need a calculator and about 3 minutes to answer the simple question: "What's the price?"

How to fight back when a trip to the supermarket feels more like a pop quiz in math class? Learn the difference between "unit price", "shelf price" and "target price" to cut through the pricing maze. Focus on these price pointers to guide buying decisions at the grocery store:

Compare Costs According to Unit Price

It's the grand-daddy of all pricing considerations: unit price. For most foods, it's expressed as the cost per ounce--and it will tell you at a glance whether the 16 ounce bottle of salad dressing is a better buy than the 8 ounce bottle.

For those of us who aren't enamored of arithmetic, it's not always easy to calculate this price on the fly. To find unit price, divide the total cost of the item by the number of ounces: a pound package of pasta that costs $1.60 carries a unit price of 10 cents. The larger, two-pound package that retails for $2.40 has a unit price of just over 7.8 cents, making it the better buy.

However, reaching that conclusion took this math-phobic writer three minutes and some pencil scribbling on the back of an envelope.

Thankfully, many jurisdictions require grocery stores to list unit prices on shelf tags. Wear your reading glasses to find the tiny type, but the information you need will be found in the small print!

Making buying decisions according to the unit price also protects against what our friends at The Consumerist term the "grocery shrink ray".

Our 16-ounce bottle of salad dressing stands next to a "new improved" package of the same flavor. Close inspection shows that the new bottle design contains only 14 ounces of dressing--but it's being sold at the same price as the older model.

Comparing unit prices guards against inadvertently paying more for what looks like the same product.

[pagebreak]

Treat Shelf Prices with Skepticism

What's a shelf price? In today's supermarket, the price listed on the shelf for each item is closer to a myth than to reality--and smart shoppers treat the price that's on the shelf with a grain of salt.

Sure, our grocer labels each shelf in the salad dressing department with that $3.69 price, but if you buy with a club card? You'll pay only $3.29. Add in promotions, coupons and club rewards, and the "real" price for the dressing comes down to a figure closer to $2.89.

This week, anyway.

Markets use inflated shelf prices to tout "specials". By claiming that this week's salad dressing sale price of $2.99 has been reduced from the inflated shelf price, it creates an illusion of a bargain.

Similarly, wildly inflated shelf prices tend to go hand in hand with promotions like Buy One Get One Free. Called BOGOF by dedicated sales shoppers, these events could also be spelled BOGUS: too often, the shelf price of the "buy one" is more than double the non-sale price the previous week.

Bargain? Hardly. Free? Not when you pay more than double for that first item.

Tune In to Target Price

Unit price points out the best buys on any one trip to the supermarket, but how do you know whether this week's prices are high or low? Enter the target price!

Achieving real supermarket savings requires knowing the target price: the lowest sales price offered for that item over the life of the sales cycle.

It's the rock-bottom, on-sale price that signals the bargain hunter to buy in bulk and stockpile against the weeks when prices are high.

Establishing target prices requires observation over time. The tool of choice: a price book.

By tracking weekly price fluctuations for family staples--cereal, tomato sauce, peanut butter--the price book establishes the lowest sales price for each item, and illustrates the sales cycle, or length of time until the discounted price is available again.

Take an example: foil packets of water-packed tuna. A staple of lunch bags everywhere, shelf prices for packet tuna range from $1.49 to $2.19 ... but once every 7 to 8 weeks, tuna packets go on sale for one dollar. When they do, it's time to visit the store and stock up!

Knowing that the sales cycle is 7 to 8 weeks long, smart shoppers purchase enough tuna at the target price to tide the family over until the next sale.

Make Sense of Multiple Pricing

One final arrow in the supermarkets' price arsenal: multiple pricing. Offering products at prices like "2 for $7" or "3 for $5" are designed to do two things: obscure the true price of a single item, and subtly pressure shoppers into buying more than one.

After all, selling bottled barbeque sauce at "3 for $5" sounds like a much better deal than pricing single items at $1.67--and it encourages shoppers to add three bottles to the cart, even when the family only needs one.

Fight back! On an index card, write out single prices for commonly-offered multiple price points, and tuck it into your wallet or coupon holder.

When you can see at a glance that the frozen pizzas priced at "3 for $10" cost $3.34 each, you'll be free to reach for the $2.99 brand on the next shelf.

Prepared to spend less at the supermarket? Brush up on your pricing power ... and save!

Printables: 
Price Book
Shopping List