The ultimate guide to buying in bulk

A well-executed bulk purchase of an item can save you a lot of money, Hamm writes, but a poorly-executed one can cost you money,

By , Guest blogger

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    Bottles of Heinz organic tomato ketchup are on display inside Costco in Mountain View, Calif.
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Over the last several years, Sarah and I have become reasonably skillful practitioners in the art of buying items in bulk, through trial and error.

Our goal, of course, is to save money. A well-executed bulk purchase of an item can save you a lot of money. A poorly-executed one, though, can cost you money, as Sarah and I have learned the hard way several times over the years.

Lately, I’ve been trying to write an “ultimate guide” to buying in bulk, but I’ve realized that everything I write essentially boils down to a handful of sensible principles. If you stick to these steps, you’ll save significant money when making bulk purchases. The further you stray, the less likely you are to save money on your bulk buys.

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1. Price-per-unit is king.
The entire goal of a bulk buy is to make sure that the cost per unit is as low as you can possibly get it, then buying a ton when that cost per unit is low. Thus, to really maximize a bulk buy, you need to know how to calculate cost per unit quickly and efficiently. 

Cost per unit, in concept, is really easy to calculate. A “unit” is the actual amount of something you’re getting. A roll of toilet paper is not a unit. However, a square foot of toilet paper is a unit. A bottle of ketchup is not a unit. However, a fluid ounce of ketchup is a unit. An actual unit will always directly relate to how much you use, so a bottle of ketchup might be used a varying amount depending on the size of the bottle, but you’ll usually use an ounce of ketchup the same way regardless of the bottle it’s in.

Cost per unit requires you to figure out how many units you would actually be buying (usually multiplication). Then, you take the total cost of your purchase and divide that by the number of units.

What you are always looking for are situations where you can push the cost per unit at least 50% below what you would normally pay. Usually, the large versions of the items have a lower cost per unit, but it’s worth calculating it in each case.

2. Never bulk buy an item you haven’t tried before.
You may find that the product doesn’t meet your needs, even if you expect that it will.

For example, I bulk bought a particular type of men’s body wash a while back, only to find out that it dried out my skin something fierce. It gave my skin a feel that could be described as crunchy or crispy. That’s not something you want in a soap that you’re going to use daily for the next several months.

I’ve bought trash bags where the bottom has ripped out of nearly every other bag. I’ve bought hand soap that didn’t lather. I can go on and on with examples of products that seem like they would work but simply do not.

Don’t waste your time bulk buying an item unless you’ve personally used it and you know that it works for your needs.

3. Never bulk buy perishable goods unless you’re going to go home and process all of it immediately.
We rarely buy anything perishable in bulk. On the rare occasions when we have done so, we’ve gone home and used all of it within a day or two, either directly in meals or by canning or freezing it.

Sometimes, you will find stupendous deals on fresh items if you buy a lot of them. For example, I once bought about fifty pounds of tomatoes for the price of about five.

The problem is that even if you save 50% or 75% off of the item, if you don’t use a significant portion of that item, you’re not saving money. Even then, you still have to deal with getting rid of the excess. With perishables, your window of opportunity to use the item is limited and the cleanup of the excess can be messy.

If you have a plan for all of it – say, going home and making four fresh lasagnas and freezing the rest of the tomatoes you just bought – then it can still be a good buy. Without a plan, though, a bulk buy of a perishable item is more trouble than it’s worth.

4. Stack coupons and sales when bulk buying.
The best time to bulk buy is when you can stack coupons on top of bulk purchases. With a bit of planning, you can do this really well, especially if there are no limits.

When I browse through coupons, if I happen to notice a particularly good one, I’ll print off several copies of that coupon. Then, I’ll hold onto them and wait until there’s a sale – and, surprisingly often, the local stores will have a sale on that item well before the coupons expire. At that point, I’ll go in there and drop all of the coupons at once on top of that sale.

Most stores will work with you on this, particularly if the sale doesn’t have a limit. Explain that you want to use these coupons before you go through and they’ll make it work for you.

Remember, the goal is to minimize the cost per unit, and using a coupon on top of a sale achieves that quite effectively.

5. Ensure you have adequate storage space before you buy.
If you don’t have a place to put the stuff, you’re going to find yourself in a pretty serious pickle when you get home. If you’re thinking of buying something in bulk, make sure you have storage space before you make that purchase.

Also, it’s worth noting that you should never, ever consider increasing your living space just so you can swing more bulk buys. If you’re looking at a home and are leaning toward a more expensive one because of a roomier basement for your bulk purchases, then you need to re-think things. Getting a bigger mortgage, paying more property taxes, and having higher utility costs so you can store some extra bulk items is not a wise financial decision.

Many families in our area have a storage room in the basement that also doubles as a tornado or storm shelter (we have one, but it functions as a laundry room for us). This is a great spot for stowing away bulk purchases so that they don’t take up kitchen space.

6. Don’t pin yourself against the wall by running out of non-perishables.
If you get into a routine of buying in bulk, you’ll start to get used to just heading to the place where you keep those purchases and refilling whenever you need something. Of course, even with bulk purchases, you’ll run out eventually – and then, if you need something, you’re up against the wall.

A good routine to establish is whenever you see that you only have one or two items left out of your bulk stash of a particular item, start actively looking for a bargain on that item. Some items go faster than others, so keep that in mind. I like to make sure I’m good for at least one full month with most nonperishables.

Generally, if I know I have enough of an item already, I don’t even look at sales on that item, but sometimes something absurd jumps on you. I recently purchased a ton of men’s body wash for roughly a quarter a bottle. I’m now sitting on quite a few bottles, but I’m probably going to donate some to the local food pantry.

7. Don’t bulk buy everything at once unless you have an enormous bankroll.
When people first start getting into bulk buying, they often go crazy and buy everything in bulk, spending themselves into debt. You do not want to start off by heading to the store and dropping several hundred dollars if you don’t have it in hand.

A much better approach is to simply raise your household supply budget by about 25% for several months. Use that extra 25% to engage in some bulk buying, taking advantage of big sales when you see them.

Eventually, you won’t need that extra 25%. In fact, your household budget will now be significantly lower than it was before because most of your household purchases are simply irregular refills of things you already bought in bulk, plus you now can sit and wait for the truly good discounts.

Don’t do it all at once unless you have that cash easily available or you undo the financial advantages of bulk buying.

8. Split up bulk buys with friends and family.
A final tip: if you see a really big bulk purchase that could save you a lot of money – like a 50 pound bag of rice or something like that – but you just can’t deal with the amount you’d be buying, talk to some friends. If you can get three friends to split that huge bag of rice with you, you’ll each wind up with 12.5 pounds of rice, which is much more tolerable, plus three of your friends got the same discount.

I’ll often check with people in my area on social media for these kinds of bulk purchases. If you can find a few people who want to jump on board, just go ahead and buy it, then split it up into equal amounts and figure out what everyone owes you.

Sure, you might end up getting stuck with a double portion of a bulk buy, but you can always turn to your friends to get rid of that via someone else.

Bulk buying really can save you a lot of money, but you can’t just charge in. Plan things in advance a little bit and you’ll be very glad you did.

The post The Ultimate Guide to Buying in Bulk appeared first on The Simple Dollar.

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