You must have faced situations when you are supposed to compare prices of items that are not sold in equal quantities. If it has confused you a bit, then let me tell you here that by knowing the unit price of those goods, you can easily make the comparison.
In simple terms, Unit Price is the system that tells the price of a consumer good in terms of any standard unit of measure. With the help of unit pricing, you will get the cost per kilogram, cost per liter, cost per dollar, etc. of the items that you plan to buy or sell.
In this article, we will dive deep into the concepts of Unit Price, and understand what it is, how it works, and how you can calculate the unit price of any good. So, without any further ado, let us get started-
Introduction to the concepts of Unit Price
There are certain times when it becomes make to decide whether a bigger package would be able to provide you with more value or not when you are trying to shop from a proper store.
However, there is a method that you can use to determine that and we are going to talk about it a little bit.
Have you ever heard of the unit price?
Well, when you are checking the unit price of the item, you can know the value of the product in the best way depending on the cost that it has.
Hence, Unit Price plays quite a significant role in helping businesses in making more prudent buying decisions so that they can appreciate the better returns on investments.
Let us now have a closer look at the definition of Unit Price-
Defining the Term Unit Price
Unit price is the cost per quantity of the product that you are trying to buy.
Now the quantity could be per unit of measurement or item as well, which includes ounces, gallons, liters, grams, and so much more.
To calculate the unit price, one needs to make sure that they are correctly deciding the total cost that the product has with the quantity that they can receive. Also, you can go ahead and check out the shelf label of the product to know that as well.
After that, you can easily compare the unit price that two different packages have to determine which one has more value.
Doesn’t that seem like something that you would want to do in the first place? We can guarantee that this unit price is going to help you out in the best way.
How Does Unit Pricing Work?
Now you must be wondering how the unit price system works to help the businesses/consumers in finalizing the best business deals?
Well, we are going to answer that question for you right here and right now so that you can have an idea in the best way.
With the help of unit pricing, there is no doubt that consumers are the ones that are going to be the most benefitted. They can easily compare some of the prices of different goods that are packaged and determine the value.
If you have two packages that don’t sell equal quantities, then you can easily check out the unit price to know which will provide you with more profit in the first place.
That is probably one of the main reasons why people want to try finding out the unit price in the best way possible. With the unit pricing, the shopper can tell which product would be a better buy. So when it comes to comparing the products while buying, the unit price provides you with an accurate idea.
Understanding the Basics of Unit Price
When you want to make sure that you are able to calculate the unit price in the right way, there are some things that you need to always keep in mind. These things are going to help you get some great results for sure.
You need to have a proper understanding of the basics when you are starting on the whole process of finding out the unit price. Well, you can check out some items on the shelf first. There are some prices mentioned there.
These are the prices that are applied to the entire package. This is not the unit price for sure.
If you want to find out the unit price, then you also need to check out the quantity of the product on the shelf. This will let you know how much you will be paying for every single unit.
The process is pretty simple.
All you have to do is divide the price with the quantity, and you are all done.
Let us now have a look upon the steps of calculating and comparing the Unit Price so that you can get the best bargains-
Two Steps of Calculating and Comparing Unit Price
1) Calculating Unit Price
- First of all, you need to check the total price of the item
- In the second step, you should find out the quantity of the item that the package contains
- Now, you should make sure that both products have the same unit of measurement
- Finally, you should divide the total price of the product by the quantity to get the unit price
2) Comparing the Unit Price
- Perform the calculation of the unit price of goods you are thinking to buy
- Opt for the item that has the lowest unit price
- Always make sure that the quality of both the items is the same
Let us now understand how you can calculate the unit price with an example-
Examples of Unit Price Calculation
1) Choosing the best bargain for Olive Oil
Suppose you need to find out the most profitable option from
2 liters of olive oil at $4.80
1.5 liters of olive oil at $2.40
In this example, your unit will be 1 liter, and the Unit Prices will be:
$4.80 / 2 liters = $2.4 per liter
$2.40 / 1.5 liters = $1.60 per liter
So the lowest Unit Price (and the best bargain) is 1.5 liters of olive oil at $2.40.
2) Choosing the Lowest Unit Price of Pencils
Suppose you need to choose the best bargain from
11 pencils for $5.00
7 pencils for $2.70
Then the unit cost will be
$5.00 / 11 = $0.45 per pencil
$2.70 / 7 = $0.38 per pencil
So the best bargain deal for you would be 7 pencils for $2.70.
Unit Price Wrap Up!
So, that is all you need to know about the unit price and how to find it. We are pretty sure that it helped you out in the best way.
Being well adept in the concepts of calculating unit price is quite essential for making the right business decisions that can ensure better profit margins for you.
What are your thoughts about the importance of Unit Price in making effective business decisions? Are you having any doubts about the calculations of the unit price? Feel free to share your queries with us in the comments below.