A price book is simply a list of the items you use regularly and the best prices they sell for in the stores where you are willing to shop. It is an excellent tool for tracking prices, sales and buying opportunities. Prices in a price book should be listed by cost per unit so you can easily compare different size packages from different stores. When you see a deal in the weekly flyer or in the store, you will know instantly if it is really a good deal and worth your time to go out and purchase. Just because an item is on sale doesn't automatically make it a good buy. The regular price at some stores may be less than the sale price at others. Your price book is an invaluable tool to help you determine if a sale is really a deal.
You don't have to create the whole book at once, just carry it with you when you go to the store and write down the best prices when you see them. You can also use the weekly sales flyers and your store receipts to find the best prices. If you make an entry in your price book and then find a better price at another store, change the information to reflect the better deal. After a while you'll have an excellent price record of the things you like to buy. If you add dates to the entries you will begin to see the sale pattern for that item. You don't need to include everything you ever use in the course of a year, just those items you buy regularly. You can price items for as many stores as you want or just the main store at which you shop.
Is it a better deal to buy the largest size of an item or the smallest size? You will be surprised to know that biggest isn't always best! Larger sizes can be more economical than smaller sizes, but that is not usually the case with this system. A smaller size item that is on sale can often be less per unit than the larger size of that same item. When you use a coupon on top of the sale, you can really cut the cost per unit.
Calculating Cost Per Unit: Some stores make it especially hard to figure out cost per unit (ounce, pound, etc.) because they list the prices on the tags as 3/$5.00 or 2/$4.98. First you have to figure out the cost of one of the items and then you have to figure out the cost per unit. You may think this is difficult, but just take a small calculator with you when you shop so you will not have to figure the cost in your head. When stores offer shelf tags with cost per unit clearly indicated, you won't need that calculator.
Sample unit shelf tag:
Your Price
$1.99
Unit Price
$1.77 Per Pound
18 Ounce Box Of X Brand Cereal
Order Number
Number of packages per case
UPC Number
Barcode
To figure out the cost per unit of an item, follow this simple equation:
Cost of item divided by the # of units = cost per unit.
Using the shelf tag example above, the equation would look like this:
$1.99 divided by 18 ounces = .11 (11 cents)
In this case, the cost per unit is 11 cents per ounce. When you see this same cereal on sale elsewhere in a different size package, you can easily calculate which package is the better deal. For instance, if a smaller size package of the same product is on sale for $1.15 for a 12-ounce package, you will have enough information to be able to compare the two packages. The 18-ounce package is 11 cents per ounce ($1.99 divided by 18 oz. = 11 cents per ounce). The 12-ounce package is 9.5 cents per ounce ($1.15 divided by 12 oz. = 9.5 cents per ounce). As you can see, the smaller package on sale is a better deal than the larger package at regular price because the cost per ounce of the smaller package is lowest. Often the difference is much more than just a penny per ounce and the savings can add up very quickly.
Some people use a small spiral notebook and write in the prices of the items they use. Others use spreadsheets or word processing software to enter their price book prices. There are even some high tech options such as downloading a price book program into a handheld computer. Your price book can be as short or as long as you wish. You may decide to list the top 20 items you buy regularly or you may decide to create a 10- page list of all the items you buy. How in-depth you make your list is up to you. The key is that it is accurate and that you can reference it easily when you are shopping.
The following price book sample contains details on sale dates, stores and brands, as well as unit price. Some price books only include the item, size and brand and do not get as detailed as this example.
Price Book Sample:
Department: Dairy
Date
Store
Item
Brand
Size
Amount
Unit Price
04/24
ABC Grocery
yogurt
store brand
8 oz
$0.50
6 cents per ounce
08/23
DEF Grocery
sour cream
XYZ brand name
16 oz
$0.99
6 cents per ounce
04/14
GHI Grocery
shredded cheese
store brand
8 oz
$0.99
12 cents per ounce
Now that you know how to create and use your price book, you will never have to wonder if the sale price in the flyer or the great deal posted in the store is actually a bargain worth buying!
(This article is an excerpt from Kaye Prosser's book The Smart Spending Guide and was reprinted with permission.)
Check out this great article called Price Book 101 at the Dollar Stretcher (this link will take you to another site outside of FamilyCorner.com)
About the Author:
Faye Prosser is the author of "The Smart Spending Guide", December 2005. Her mission is to help others become effective advocates for themselves and their hard-earned money. She teaches people how to budget, reduce debt, and save tremendous amounts of money on groceries and everyday purchases. For more information on "The Smart Spending Guide", the Smart Spending Coupon Organizer or Smart Spending Workshops, visit her website.
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