Unit pricing

Published: 16 June 2016

Summary: This video explains how unit pricing works in practice and how you can use unit pricing to shop smartly.


FEMALE PRESENTER: We all want value for money. But sometimes when we're shopping for the simplest items, it's difficult to know exactly what product is offering real value. The difficulty is that we can't make direct comparisons.

We have to try and compare one item at one price with another which is sold in a different quantity, a different volume, a different measure. You almost need a calculator to work out which one really is the best buy. That's where the unit pricing code comes in.

The code, which is enforced by the Australian Competition and Consumer Commission, the ACCC, requires some grocery retailers and online grocery retailers to display a unit price on labels and in advertising.

So what is a unit price? Unit pricing means that as well as the total selling price, the retailer will show a unit price based on a common unit which might be per 100 millitres or per 100 grams. Fruit and vegetables might be per item or per kilogram. Beverages per litre.

Milk's a really simple illustration of how it works and benefits the shopper. In the dairy section you're confronted by containers of all different sizes, you just want a bottle of milk. Is it better value to buy the large three litre container than if you buy a single litre bottle? Unit pricing means that the tickets compare prices in a way that answers the question. The cost per litre is shown for all of the packaging options.

When the same items are bundled you get the same question. For example, if a supermarket advertises five 400 gram tins of soup for $8 the unit price of 40 cents per 100 grams must be displayed in any catalogue or in store signage where the selling price is stated. This means that you'll be able to compare this special price with the unit prices for all the other soup on the shelf.

Unit pricing is perhaps the most useful with those items that come in odd measures and usually elaborate packaging. Cosmetics and toiletries are a good example. You can't always tell how much of something you're buying, when the packages of bottles maybe made of thick glass inside boxes. And when you look to find out how much you're actually buying, it might be 26 millilitres here and 31 there. How is a shopper meant to compare for value? Here, unit pricing standardises the price. It shows you how much you're paying for each 10 ml or 10 grams of the product or per item included in the packet.

So, throughout the store unit pricing can help the shopper make informed decisions about value for money.

Small grocery retailers such as supermarkets with the floor space of less than 1000 square meters can chose whether to unit price their stock. If they do opt in, they have to unit price all of their groceries.

Some merchandise is exempt from unit pricing. Certain mark-down products, electrical items and stationary are examples.

You can find out a lot more about the unit pricing code on the ACCC website and from ACCC publications.