Buying in Bulk has Incredible Money-Saving Power

Bulkonomics may appear to be about saving pennies with the display of the cent symbol on each product page, but really it is about saving hundreds of thousands of dollars over your life time. In this post we walk through the math of how much money buying in bulk can save you. Don’t worry the math is easy and the money-saving power is obvious.

The Unit Prices

To start, let’s take a product we all use like toilet paper. As a non-bulk purchase, you might buy 4 rolls of 2-ply toilet paper for $4.19. This would be the equivalent of buying your TP from CVS or Walgreens in small quantities. I found a product that meets this description and the label says it’s 73.3 square feet of tissue. Converting to a unit price):

\[\text{TP}_{\text{Non-Bulk}} = \frac{$4.19}{73.3 \text{ Sq.Ft.}} = \frac{$0.057}{\text{ Sq. Ft.}} = \frac{5.7¢}{ Sq. Ft.}\]

Checking the bulk unit price of toilet paper here on bulkonomics, we find the lowest cost 2 ply toilet paper is \(\text{TP}_{\text{Bulk}} = \frac{1.3¢}{ Sq. Ft.}\) as of January 5th, 2020.

The Money Savings

If we subtract these two unit costs and multiply by the bulk square foot quantity, we can see how much we save with this single bulk purchase.

\[\text{Bulk Savings} = \left[\text{TP}_{\text{Non-Bulk}} - \text{TP}_{\text{Bulk}}\right]\times \text{Bulk Quantity}\]

For this bulk purchase we use the 1,593 Sq.Ft. listed for the Costco toilet paper. Plugging in our numbers from above we find:

\[\text{Bulk Savings} = \left[\frac{5.7¢}{ Sq. Ft.} - \frac{1.3¢}{ Sq. Ft.}\right]\times 1593\text{ Sq.Ft.} = $70.09\]

Wow, our bulk savings are over $70 bucks! This assumes we kept going back for that small quantity of toilet paper at the higher unit price. We may not do this for toilet paper, but we could do this for many other products that we routinely need.

The Incredible Money-Saving Power

Now for some assumptions to show why this is so extraordinary. Sources say the average person using about 2,500 Sq.Ft. of toilet paper a year. Let’s assume a small household would purchase 3 of these 1,593 TP bundles in a given year and saves the difference in the stock market 1. Doing this for a decade results in more than $3,115 in the bank. Now that’s Incredible!

  1. 8.5% compounded growth with $210(=$70*3) added annually.  

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