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Does Buying in Bulk Save Money?

January 25, 2021 · 5 minute read

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Does Buying in Bulk Save Money?

Conventional financial wisdom says buying in bulk is smart. When you buy en masse, the price per unit tends to drop. So the thinking goes, if you buy more, the less each unit winds up costing you. Seems simple enough, but like anything financial, there’s a bit more to the story.

It’s worth doing a deep dive on buying in bulk. What do you need to know, what mistakes should you avoid, and do you really save money?

The Pros of Buying in Bulk

Who isn’t looking for ways to save money? A firm financial foundation starts with saving. While the big deal is the potential for saving money on the cost per item, there are other reasons to shop in bulk.

For one thing, it’s typically more socially conscious and environmentally friendly because bulk purchases usually have significantly less packaging per use than smaller purchases have. (Envision a mammoth pickle jar or tub of frosting.)

Ideally, buying in bulk also means you shop less, and that’s less time spent on the road and burning gas.

Then too, who knows what additional savings you might rack up just by being in the store less frequently and having fewer opportunities to pick up things that weren’t on your list?

If you’re the organized type who is big on preparing meals in advance, cooking lots of food and freezing it, buying in bulk can make that endeavor easier.

For sure it’s cost efficient to prepare your family’s favorite pasta dishes and soups and have enough for today and whenever you’re ready for round two, or three.

Finding the Price Per Unit

This is one time you need to do the math. To capitalize on a bulk buy, determine the cost per unit. What is a unit? Think measurements like ounces, square feet, grams, and gallons.

A bottle of olive oil is not a unit. A fluid ounce of olive oil is.

A roll of paper towels is not a unit. A square foot of paper towels is.

Figure out how many units you are buying. Take the total cost of your purchase and divide that by the number of units.

Then compare the unit prices of a few packages of the same product to determine which is the better value.

Ideally, the cost per unit of a bulk buy should be at least 50% below what you would normally pay.

Although a supersized item usually has a lower cost per unit than its smaller brethren, crunch the numbers to see.

How Much Can You Save By Buying in Bulk?

The answer is: It depends. While the amount shoppers save depends on the item, they can anticipate saving around 20% on purchases, though it can be 50% or more.

Foragers can also up their savings from buying in bulk by using coupons for those items.

Remember, what’s important isn’t an item’s price but the price per unit.

Two Tips for Buying in Bulk

Whenever you buy in bulk, you need a game plan. It’s a good idea to reach for the familiar and sweeten the deal by looking for familiar items that are also on sale.

Stick With What You Know

This is not the time to experiment. If you’re loading your cart with goods, you don’t want to be guessing about whether you’ll love them or not. Go for the family’s beloved items.

Buying in bulk and getting a deal is worthless if nobody wants to eat or use what you buy. That’s money down the drain.

Search for Your Favorites on Sale

Just like you don’t want the tax tail to wag the investment dog, you don’t want to buy what’s on sale solely because it’s on sale.

The goal is to get what you know and love on sale, not to be overly adventurous and wind up disappointed, with a few fewer dollars in your pocket to boot.

What to Buy in Bulk

Some products are perfect for stockpiling. While your list will depend on your family, think items like paper towels, toilet paper, detergent, dishwashing liquid, sponges, aluminum foil, toothpaste, canned goods, frozen foods, beans, rice, sugar, flour, and nonperishables.

On the flip side, generally, you don’t want to load up on fresh produce unless you are cooking for a crowd, as your family may not be able to eat it all before it perishes.

The Cons of Buying in Bulk

For sure buying in bulk can work to your advantage, but it’s not without caveats. You have to come out of your pocket big time.

Let’s say you pay $40 for $60 worth of lotion, but what if $40 puts a bigger squeeze on your budget than buying them one at a time, weeks apart? If you use a credit card, fine—if you can pay off the entire bill when it’s due. If you incur interest charges, that will eat into your “savings.”

Keep in mind, too, that you need space to store all that stuff and a car to pile it in to take home. If either of these are issues, buying in bulk may not be ideal for you.

Know thyself. Maybe you are the person who gets bored quickly and takes to heart that variety is the spice of life. When you’ve got mega amounts of the same product, be prepared for sameness for a long stretch, which is all the more reason to purchase only what you love, as you may be using it for months.

If you’re going deep into bulk buying, you likely won’t settle only for what you can get in bulk at the grocery store but will want to shop at the warehouse stores like Costco and BJ’s. Consider the annual membership fees that are required.

Costco’s “Gold Star” membership is $60, and the “Gold Star Executive” level is $120. BJ’s tiers are $55 and $115. Sam’s Club advertises membership fees of $45 and $100.

Will you frequent the store enough to make the fee worthwhile?

Mistakes to Avoid When Buying in Bulk

As with all shopping, you need to be mindful of a few things. Understand that more is more. If you have something in abundance, it’s all too easy to be less conscious of how much you’re using, meaning you could overuse.

This can get tricky when it comes to food, especially snacks. Overeating poses its own problems. Avoid this by purchasing only what you need.

A study from Dartmouth’s Tuck School of Business found that people shopping at warehouse clubs were spending more on packaged food, making more shopping trips, and taking in more packaged food calories than if they didn’t shop at a club store.

The study showed that those who shopped regularly at club stores had a 5% increase in the amount of money spent on packaged food per person in the household, and an 8% increase in calories consumed than if they had not shopped at a club store.

Buying in bulk can be a fun way to save money, but don’t get so giddy grabbing great buys that you forget important things like expiration dates. Products like bleach and sunscreen expire in 12 months or less.

Be sure you can use what you buy before you have to throw it out. Another option is to buy, share, and split the costs with your friends. That avoids waste and saves money for all involved.

The Takeaway

Buying in bulk has its advantages. You can save money, but you’ll need to be savvy. Buy only what you need and what you can use in a timely fashion.

Like all shopping, but particularly in warehouse stores, temptation is everywhere. It’s best to know how to compare cost per unit and to have a list.

Speaking of planning, track your spending with SoFi Money®, a cash management account that has no account fees or monthly fees.

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