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Unit Prices For The Knockout

by Greg Rosalsky

In a recent episode of Planet Money, we dove into the wild world of package sizes. Tiny Coke cans. Family size cereal. Travel size deodorant. Jumbo size peanut butter jars. Companies have figured out that by fiddling with package sizes, they can squeeze more money out of us. The practice is known in the biz as “price pack architecture,” and as we reveal in the episode, it’s really taken off over the last couple decades.

Today in the Planet Money newsletter: how consumers can fight back and defeat these packaging gimmicks.

But, before we get to that, we should say some forms of price pack architecture may actually be good for consumers. For example, maybe I don’t want a whole gallon of chocolate milk. I won’t drink it all before it goes sour. It’s great I can just buy a quart. More consumer choice for the win!

But, there’s also a dark side to price pack architecture. Given you’re reading this newsletter — and given that the President of the United States mentioned it in this year’s State of the Union speech — you might have heard about perhaps the most famous and devious form of it: shrinkflation. It’s a sneaky form of inflation, where, instead of just raising prices, companies shrink the amount of stuff they provide in packages.

Shrinkflation is really inflation in a literal sense. It means the price per unit — for example, a dollar per ounce or 2 cents per Cheeto — goes up. You get less product for your buck.

Justin Sullivan/Getty Images

With all these package sizes — and changes to package sizes — it might seem like we’re destined to be on the losing end of intricate packaging strategies that enable companies to extract more money from us. But, luckily, there’s a relatively simple way to see through the fog of packaging gimmicks and spot the best deal: pay attention to unit prices!

For example, if you are trying to decide whether to buy that “family size” box of Cocoa Puffs, the “giant size” box, or just a regular box, look at the price per ounce. At many stores across the country, the price tag conveniently includes this number. It’s a standardized measure that makes shopping for the best value easier. Sometimes stores do this voluntarily. And sometimes the government forces them to do it.

Many stores, however, do not post this number. There’s no federal legislation mandating that stores do it. It’s been left up to the states. According to the National Institute of Standards and Technology, a federal agency, 19 states have enacted unit pricing laws or regulations. And, of those, only nine states mandate that stores provide consumers with this information.

New Jersey is one of the states that requires stores to display unit prices — and they apparently take this requirement very seriously. Last month, New Jersey regulators fined Walmart over $1.5 million after inspectors found more than 2,000 inaccuracies in displayed unit prices at New Jersey stores.

“As the price of grocery items continues to rise, it’s more important than ever to ensure consumers have all the information they need — and are entitled to by law — to make educated decisions on how to spend their money," said New Jersey Attorney General Matthew Platkin. “New Jersey will not allow retailers to engage in unlawful pricing practices that deny shoppers the ability to easily compare prices to figure out which product is a better buy.”

Consumers seem to appreciate when stores provide them with (accurate) unit prices. The Food Marketing Institute found that 78% of consumers use unit prices if they’re displayed. However, they’re still not available at many stores around the country.

If you live in one of the dozens of states where stores aren’t required to post unit prices and the store you’re shopping at doesn’t voluntarily do it, there’s still a solution. However, we’ll admit, it’s more annoying: bring your calculator (or, more realistically, just use your smartphone). Take the total price, the amount that’s in the package, and then divide. Boom, you have the unit price. Do it again for another product, and now you can do an apples-to-apples comparison to help figure out what’s the best value.

If using a calculator is too inconvenient or nerdy for you, well, then maybe talk to your elected representatives about enacting policies that encourage stores to post unit prices. Then you won’t have to do math.

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How to fight shrinkflation? Pay attention to unit prices at grocery stores

Unit Prices For The Knockout

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