Ways to Save Money

This Counterintuitive Coupon Strategy Will Help You Save Big

April 8, 2015
by Steve Gillman
Contributor
how to use coupons

Here’s a test of your shopping savvy: If you have a coupon for 50 cents off any size of Crest toothpaste, do you buy the 6-ounce tube for $2.99 or the 1.5-ounce one that costs $0.99?

The normal price per ounce is $0.50 for the big tube and $0.66 for the small one, so it seems that the larger one is the better deal, right? Maybe not…

When you apply your coupon, you pay either $2.49 or $0.49 for the big or small tube, respectively. That brings the cost down to $0.42 per ounce for the big tube, but all the way down to $0.33 per ounce for the small one. When you have a coupon, often the smaller size is the better buy.

Back when grocery stores commonly offered to double coupons, that small tube of toothpaste would be free, making the math really easy. Only a few places double coupons now, but even without the doubling it makes sense to choose the right size product to maximize the value of your manufacturer coupons.

Choosing the Right Size: The Math

The following strategy is all about reducing the “unit cost,” which is most often measured as the cost per ounce. The math is tricky, but another example will help explain.

Let’s say you have a coupon good for 45 cents off any size of Bumble Bee Tuna. At my local Walmart, they have 12-ounce and 5-ounce cans. The 12-ounce can costs $2.38, and the 5-ounce can costs $1.09. The unit price tags on the shelf show this:

  • 12-ounce can for $2.38: 19.8 cents per ounce
  • 5-ounce can for $1.09: 21.8 cents per ounce

It seems you should get the bigger can, right? It costs less per ounce. But look at what happens when you apply that 45-cent coupon:

  • 12-ounce can for $1.93: 16.1 cents per ounce
  • 5-ounce can for $0.64: 12.8 cents per ounce

Getting the smaller can means you pay 20% less per ounce!

On the other hand, if your coupon is for 15 cents off, the larger size would be the best deal per ounce (18.6 cents per ounce versus 18.8 cents per ounce). In this particular case, any coupon worth 20 cents or more makes the smaller size cheaper by the ounce.

A Sneaky Way to Avoid Doing the Math

Of course, you may not want to do the math for everything you buy, and it can be difficult to do it while in the middle of a busy grocery aisle, so is there a shortcut? Yes… sort of. The key is to buy small sizes with high-value coupons.

What’s a high-value coupon? For this purpose, you might define as “high value” any coupon good for a discount of at least 30 cents. If you don’t do the math, you might still occasionally pay too much, but you’ll get it right most of the time.

And in my experience, if the coupon is good for a discount of at least 50 cents this strategy almost always produces the lowest unit cost.

Is There Another Catch?

This strategy works best under these two conditions:

  1. You use coupons often.
  2. You’re flexible about which brands you use.

It fact, the strategy works only when you use coupons often enough, which is not easy to explain, but let’s try another example: Suppose you eat 200 ounces of mashed potato flakes in a year and you have only two 50-cent coupons good for any size. You could…

Plan A: Buy ten 20-ounce boxes at $2.60 each: $26.00 total

Plan B: Buy nine 20-ounce boxes at $2.60 and two 10-ounce boxes at $1.40: $26.20 total

Either way, you can use both coupons and save a dollar, so it’s clear that you still pay less overall with Plan A. On the other hand, if you had 20 of those coupons, the math looks like this:

Plan A: Buy ten 20-ounce boxes at $2.60 each with ten 50-cent coupons: $21.00 total

Plan B: Buy twenty 10-ounce boxes at $1.40 with twenty 50-cent coupons: $18.00 total

At some point, with enough coupons, you start saving more with the smaller sizes. Determining that point involves heavy math and it’s too time-consuming to do every time you have a coupon. Let’s make a simple rule instead:

Use high-value coupons (30 cents or more) with the smallest size of a product, but only if you’re using coupons most of the times you buy that product (or product type).

Flexibility helps a lot, which is why “product type” is included in the above rule. You see, there may not be a coupon available for Vlassic pickles the next time you go shopping, but maybe there’s one for Claussen or Mt. Olive pickles.

And if you have several coupons, you can stock up when the price is right. So if you’re willing to buy any of several brands of a given product type, you can more easily use this strategy to save money consistently.

The Heavy Math of Extreme Couponing

OK, some of you may want the more precise formula for determining when to use that coupon on the small size and when to use it for the larger size.

This formula assumes larger-sized items cost less per ounce (which is usually true). I strongly suggest skipping the following explanation unless you really enjoy doing math (otherwise you might never want to use coupons again). You’ve been warned…

Part One

  1. Estimate the number of ounces of the product you’ll use in a year: ___
  2. Divide line 1 by the number of ounces in the large size to arrive at the number of items of that size you’ll need if buying only that size: ___
  3. Multiply line 2 by the price-per-item to arrive at your annual “base cost:” $___
  4. Estimate the number of any-size coupons you’ll be able to use on those items in the coming year: ___
  5. Estimate the average value of the coupons: $___
  6. Multiply the average value times the number of coupons you’ll be using to arrive at your total savings: $___
  7. Subtract line 6 from line 3 to arrive at your total expected expenditure for that product if you buy only the large size items: $___
  8. Multiply line 2 by the number of ounces per large-sized item to arrive at the number of ounces you’ll buy for the year (it may or may not be the same as the estimate from line 1): ___
  9. Divide line 7 by line 8 to arrive at your projected cost-per-ounce for the year if you buy only the large size items: $___

Part Two

  1. Estimate the number of small-sized products you can buy with coupons (you may be able to use more coupons since you’ll be buying more small items to meet your estimated usage): ___
  2. Multiply line 10 by the number of ounces per small-sized item to arrive at the total number of ounces you’ll be purchasing in that size: ___
  3. Subtract line 11 from line 1 to arrive at the number of additional ounces necessary to meet your projected need: ___
  4. Divide line 12 by the number of ounces in the large size in order to arrive at the number of those items you’ll need to add to the small-sized purchases in order to meet your annual need (the larger size is cheaper per ounce when not using the coupons): ___
  5. Multiply line 10 by the price per item for the small size: $___
  6. Multiply line 13 by the price per item for the large size: $___
  7. Add lines 14 and 15: $ ___
  8. Multiply line 10 by the estimated average value per-coupon to arrive at the total savings for Part Two: $___
  9. Subtract line 17 from line 16 to arrive at your projected total cost for the year: $___
  10. Multiply line 10 by the number of ounces per small-sized item: ___
  11. Multiply line 13 by the number of ounces per large-sized item: ___
  12. Add lines 19 and 20 to arrive at the number of ounces you’ll buy for the year (it may or may not be the same as the estimate from line 1): ___
  13. Divide line 18 by line 21 to arrive at the cost-per-ounce if you buy using available coupons on small-sized items and complete your annual purchases with the large-sized items: $___

Part Three

If line 9 is more than line 22, use the strategy suggested in Part Two. If it’s less, use the coupons, but buy only the large size items.

You can see why it’s a lot easier to just have a general rule that works most of the time. Here it is again:

Use high-value coupons (30 cents or more) with the smallest size of a product, but only if you’re using coupons most of the times you buy that product (or product type).

Your Turn: Have you ever used this strategy when shopping?

by Steve Gillman
Contributor for The Penny Hoarder

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