UNIT PRICE: WHAT IT CONSISTS OF, HOW IT IS CALCULATED AND EXAMPLES - DUDAS - 2024

The unit price of an item is the cost for a single unit of measure of the item, which is sold in greater or lesser quantity than that individual unit. The price of a certain number of units of an item is divided by the number of units to find the unit price of that item.

Units can be individual items, such as cookies in a box, or they can be weighted quantities, such as grams or kilograms. For example, to find the unit price of 12 ounces of soup whose price is $ 2.40, divide $ 2.40 by 12 ounces to get the unit price of soup, which would be $ 0.20 per ounce.

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Often times, you want to determine which of two given items is a "best buy." In such cases, the unit price of each item is found and then their unit prices are compared. The item with the lowest unit price is considered the "best buy."

It is usually posted on the shelf below the product. The shelf label shows the total price of the item and the unit price for the food item.

What is the unit price?

The unit price helps consumers compare the prices of packaged products when those products are not sold in equal quantities. You can look at the items on the shelf of a common supermarket and you will see that each one is displayed at a particular price.

However, that price applies to the entire package, which can make it difficult to compare different sizes of the same products.

The unit price tells buyers how much they are paying for each unit within the package, giving them the opportunity to compare apples to apples.

Choose Units

The unit that a merchant chooses as the basis for the unit price depends on how the product is packaged and sold.

If sold by weight, the guidelines say the merchant can use grams, kilograms, or 100g units.

If sold by dry volume, use liters or 100ml units. When sold by liquid volume, quarts, gallons, liters or 100ml units are used.

If sold by area, such as fabric or grass, use square inches, square feet, square meters, or square centimeters.

If the product is sold by the count, the unit is each individual item in the package.

Regardless of the units the merchant chooses, prices must be displayed in consistent units for similar products. A store should not price orange juice in gallons, but apple juice in liters.

Price display

Unit prices that are greater than a dollar should be identified only to the nearest penny. For example, a 20-kilogram bag of dog food that sells for $ 26.79 would have a display unit price of $ 1.34 per kilogram, even though the actual price per kilogram is $ 1.3395.

For unit prices less than a dollar, the guidelines allow merchants to display unit prices to the nearest penny or to the nearest tenth of a penny. But whichever is chosen, it must be consistent throughout the store.

Quality differences

It must be taken into account that the setting of unit prices does not seek to take into account the quality of the product. Branded products often have considerably higher unit prices than generic or store brands.

It is entirely up to the buyer to decide if the difference in quality is worth the difference in price.

How is it calculated?

The mathematical formula used to calculate the unit price is as follows: Unit price = Item price / quantity.

The unit price is what allows a buyer to know at a glance which is the best purchase to make: if a 20 kilogram bag of dog food that sells for $ 13.95, or a 15 kilogram bag that sells for $ 10.69.

To obtain the unit price, simply divide the price of the package by the number of units it contains.

In the above example, the 20 kilogram bag that sells for $ 13.95 has a unit price of 69.75 cents per kilo, while the 15 kilogram bag that sells for $ 10.69 has a unit price of 71, 27 cents per kilo.

Although the 20 kilogram package is priced higher, the 15 kilogram package is more expensive per unit.

Money can be saved when you compare the cost of the same food in containers of different sizes or different brands.

Examples

Example 1

Scott really likes chocolate bars and wants to get the best possible deal on them. Is it better for him to buy three bars for $ 2.25 or each for $ 0.79?

In order for Scott to make the best pricing decision, for the first case, he must determine the price of a chocolate bar, dividing the total price of $ 2.25 between the three bars. $ 2.25 / 3 = $ 0.75.

This allows him to compare the two unit prices, making it cheaper for Scott to buy the three chocolate bars for $ 2.25. This is because each one costs $ 0.75 compared to $ 0.79 it would cost if you bought them separately.

Sometimes foods packaged in the "giant" or "family" size may seem like the best buy. You might think that buying a large container will not cost as much as two or three smaller packages.

However, larger containers don't always end up costing less than smaller ones. It is important to look at the unit price and compare this price.

Example 2

Becky eats cereal for breakfast every morning. Would it be better for her to buy a 550 gram box of cereal for $ 2.50, or a 1 kilogram box for $ 5.00?

To do this, you must first calculate the price per gram of the 550 gram box. It is done by dividing the price of the box by 550, thanks to a simple rule of three.

The price of a gram of cereal for the first box option would then be: $ 2.50 / 550grs. = $ 0.004545.

The price per gram of the 1 kilogram (1000 gram) box is then calculated, again applying a rule of three.

The price of a gram of cereal for the second box option would then be: $ 5.00 / 1000grs. = $ 0.005.

By calculating the price per gram of each box of cereal, Becky realizes that it is a better deal for her to buy the 550 gram box.

References

1. Cam Merritt (2019). How Does Unit Pricing Work? Small Business - Chron.com. Taken from: smallbusiness.chron.com.
2. University of Massachusetts (2019). Unit Price. Taken from: umass.edu.
3. University of Alberta (2019). Unit Price. Taken from: sites.ualberta.ca.
4. Tutorialspoint (2019). Finding a Unit Price. Taken from: tutorialspoint.com.
5. Wiki How (2019). How to Calculate and Compare Unit Prices at the Store. Taken from: wikihow.com.