Best of: Creating a Price Book

Since I was quoted recently on Bankrate.com and Fox Business News about how to keep a price book, I thought this would be a good time to revisit my article on creating one!

Enjoy!

We all know that eating at home can save you money! Even if you buy expensive ingredients and cook gourmet meals, in most cases you will save money over eating the exact same meal at a restaurant. But what frugalite worth their salt would want to purchase expensive ingredients (save for a very special occasion)? Keeping our grocery bill down is the name of the game.

There are really 3 ways you can save money on your grocery bill #1-saving money buying the same things, #2-saving money by buying something different and #3-not buying it at all.* This week we are looking at #1.

So here we go, heading out to the grocery store for a week’s worth (or more!) of shopping. We get in and we are instantly bombarded by colors, shapes, advertising, specials. . . all cleverly created by people who make their money figuring out how to separate you from yours! 10 for 10! By one get one free! Different prices on different brands and different sizes. It is all quite confusing. How do you make it all make sense?

Enter the all important Price Book! I’ve written about this before, back in March of 06 to be exact. But it is important enough to rehash-especially since prices on groceries have been increasing and are likely to continue to increase dramatically this summer. Knowing what is really a good price on each item, and saving as much money as possible will be even more critical.

A price book is simply a list-a list of items that you normally buy, and what their lowest prices are at the stores you typically shop at. With this list, when you happen upon a possible “deal”, you will be able to quickly and simply tell if it will actually save you money.

But there is a tiny bit more too it than that. Since items come in different size cans/bags etc, it is difficult to compare. To truly get to the bottom of an item’s cost, you need to know the unit price.

Picture by me-I don’t actually buy these, it wouldn’t be frugal! I buy the
24 oz can of peaches and divide it up into reuseable plastic containers.

Here we have a picture of a typical store shelf. You can see that the price of the item is listed in yellow-$1.48. Then there is a little orange box on the right-this is the unit price. In this particular case it is $1.48 a lb. So the unit price is $1.48 a lb.

While that is true, it is also unhelpful, unless you happen to run into another can/box/bag that is also in lbs. And in the case of peaches, most cans are measured in oz. The best thing to do is to break this unit price down to the smallest unit size possible-an oz.

This is where the math comes in. There are 16 oz in a lb, so you divide $1.48 by 16 to get a unit price of $.0925 per oz. I usually round up to 3 decimal places-so I would consider it $.093.

Can you see how doing this math each and every time you go shopping would be tedious? Not many of us would keep it up. Hence the price book!

Each person has to find the format that is comfortable and works for them. Some folks use a spreadsheet in excel and then print it out, others keep a notebook of some sort, or even index cards (which is my current choice). But the information contained on each one is the same: Name of item (specific) across the top, columns for store, brand, size, price, unit price. (Don’t worry, there are pictures further on) Why the size, price AND unit price? Well because typically I jot down the brand, size and price in the store, and do the math for the unit price at home.

To keep it simple, use abreviations for the stores. In my area I use the ones below. I also like to distinguish between a price that is the sale price and the everyday price. Personally I highlight any sale prices by putting a start next to it.

I can see you out there, shaking your head and thinking of all the work involved in compiling all this information for all those stores! Well-it doesn’t have to be that hard. Right now you probably don’t even have a price book, and are just doing your shopping willy nilly. So anything you do for the book, even in stages, is an improvement for you. Let’s do this in pieces and not kill ourselves with the process.

I like to start with the stores that I know are almost always cheaper-in my case Aldi’s and Save a Lot. Non sale price to non sale price these guys usually win hands down. So I record all the prices for my most commonly purchased items at those stores first. You can either do this by wandering around the store looking like some sort of espionage agent scribbling things furiously in a notebook, or you can do it the easy way and just go shopping and save your receipts.

As you can see, a can of corn at Aldi’s is $.39. The receipt doesn’t have a unit size, so I go to the cupboard and pull out a can and see that it is 15.25 oz. Doing the math ($.39 divided by 15.25) you find that the Aldi’s brand of corn is $.026 an oz. I do this for each item on the receipt. Each shopping trip I can do a quick check to see if I have bought any new items to add to my list.

Next I keep an eye on my sales fliers for the next few weeks. I see that corn goes on sale at both the Price Chopper and the Great American for the same price. 5 cans for $3. Doing the math that comes to $.60 a can or $.039 and oz.

With that information I can fill out my price book page. These two prices are the sale prices so I put a star next to them.

But I’ll let you in on another little secret. Even that is too much work for me. I’ve gotten to the point where I only record the price if it is LESS than what I pay for it full price at Aldi’s/Save a Lot. After all, if it is more expensive, who cares? I don’t plan on buying it there!

I simply scan the sales fliers, do the math if necessary (in this case, they were all 15.25 oz cans, so as long as the per can price was over $.39, then I didn’t worry about even figuring out the per oz price) and then only write it in if it is less. So my price book page actually looks like this:

Now you may find it necessary to go into a store to research a few specific items-or to check out a store that doesn’t send out fliers. Once you’ve built the bones of your price book, this is just a stroll down aisles marking down the brand, size, etc. Sometimes the store actually has the unit price already listed in oz or whatnot on the shelf. In those cases I mark down the size of the can, skip listing the price and just copy the unit price from the sticker.

And there you go, a price book! Once you have one, you won’t have to wonder if that 60 can of corn you found at the discount grocers is really a bargain or not!**

So what about sales and coupons? Well, I would only consider using either if the unit price winds up cheaper than the lowest price in your price book. Otherwise you aren’t really saving any money!

For more on Starting Frugality, read about discerning between wants and needs, and eating at home/eating out less!

*Note: We sort of covered #3-not buying it, when we discussed discerning between wants and needs back in the initial article in the Starting Frugality series.

**Another Note: Please be cautious with huge sizes. If you can’t use up all of it or store it correctly you may wind up throwing it out. That is not frugal at all! A smaller, but more usable size may actually wind up cheaper for you in those cases.