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Price Per Unit Formula
Why Unit Price Comparisons Matter
Retail packaging frequently obscures real value by using different sizes and round prices. A 16-oz product at $12.99 and a 30-oz product at $21.99 look similar but have very different unit costs:
- 16 oz: $12.99 ÷ 16 = $0.8119/oz
- 30 oz: $21.99 ÷ 30 = $0.7330/oz
The 30-oz option is 9.7% cheaper per unit.
Business Applications
For buyers: - Compare supplier quotes with different minimum order quantities - Evaluate bulk purchase discounts (is the extra volume worth the storage cost?) - Compare raw material costs across packaging sizes
For sellers: - Price bundles and multi-packs appropriately - Calculate the unit economics of different SKUs (Stock Keeping Units) - Ensure bulk pricing still maintains target margins
Bulk Discounts and Carry Costs
The cheapest unit price isn't always the best decision. A bulk purchase locks up cash and incurs storage costs. If you're comparing a cheaper bulk option vs a pricier small order, factor in:
- Storage/handling cost per unit per month
- Cost of capital (carrying cost of the extra inventory)
- Risk of obsolescence or expiry