Why Buying in Bulk Doesn't Always Save You Money

On the surface, buying in bulk seems like a great way to save money. But is buying in bulk cheaper? When you buy a large amount of anything, the price of individual units tends to be lower. The more you buy, the less each unit actually costs you. Yet, although this seems like a sure way to get a deal, buying in bulk often costs people more than they know.

Paying More for More Than You Need

Imagine your favorite shampoo costs $12 per 20-ounce bottle. You find out that you can buy a 180-ounce bottle for a mere $45. What a deal! For about four times the price, you receive six times more shampoo. After doing the calculations, you decide to buy the larger bottle of shampoo. However, was this investment worth it?

As a side effect, you might end up using more shampoo because there is no longer any point in skimping. On the flip side, you could get sick of using the same shampoo and switch to a different brand before finishing off the larger bottle. Or, for perishable goods such as food, buying in bulk is not always cheaper if the food expires before you can eat it!

Buying in bulk saves money per unit, but consumers must be wary of the utility of the extra goods.

Although the per-unit price may be low, the overall purchase price is higher than the price of just buying what you need for the week or month. When people are in the store and find a year's supply of crackers for mere pennies a package, they often forget to consider whether they need or want that many crackers. Signs like "super deal" and "unbelievable savings" may cloud their thinking. The difference to your shopping budget if you buy a $45 bottle of shampoo versus a $12 one may mean that you need to put the groceries on your credit card. Ultimately, the higher price could have immediate financial implications, and may or may not pay off 12 months down the road.

Taking Up Space

Another factor that bulk-shopping enthusiasts may not consider is the cost of storage. While Americans have some of the largest refrigerators in the world, there is still a healthy market for freezers, dry storage bins, and other food storage devices when the fridge runs out of space. Bulk buying may force you to purchase more storage and pay the continuing cost of storing food, such as the electricity bill for a larger fridge and a freezer.

Breaking the Budget, Breaking the Scale

Bulk buying has health-related consequences as well as financial ones. Unfortunately, over-consumption is as American as apple pie. Buying bulk only encourages this. If you have a bulk-sized jar of mayonnaise in the fridge, naturally you will try to find more ways to use it up, especially as the expiration date nears. This may mean putting more mayonnaise in your sandwiches, salads, kids' lunches, the cat's food, and so on. While you may have justified the purchase of the mayonnaise and saved money per tablespoon, but would you have eaten so much mayonnaise had you purchased a smaller jar?

More pressing than the financial problem is what increased consumption does to the health of you and your family. While using extra shampoo doesn't exactly harm the environment in a way that is immediately noticeable, consuming more mayonnaise, peanut butter, cereal, frozen meals, and other popular items available at the bulk stores will almost certainly affect your health. Overconsumption stems from the primary financial drive of wanting to get as much as we can and use as much as we get.

The Bottom Line

The best way to reduce expenses is not by always buying more of a particular product to get a bulk discount, but by being judicious of what to buy in bulk and when to use less or substitute for a cheaper product. Bulk buying is often best described as something you don't need a lot of at a price you can't pass up. It is worth noting that bulk buying does make sense for many people, especially those with large households. However, the practice has become so widespread that people are often buying bulk based on a price point, rather than the eventual use they'll get out of a product.