Unit pricing helps value brands

Posted by Oliver Koll on May 17, 2016

Retail prices usually show a price per package, let’s say €1.50 for a 500g pack of  Barilla spaghetti. Shoppers may additionally check the unit price provided, in this case €0.30 for 100g Barilla Spaghetti which they can compare against a competitor’s unit price even if sold in a different package (e.g. €0.35 for 100g Buttony Spaghetti sold in a 1000g pack for €3.5). Unit pricing provides consumers with an option to compare competing products.

A recent study provides some insights how unit prices affect decision making: Consumers show a significantly higher desire to shop for the cheaper version (i.e., cheaper retail price) of two identical products (competing brands but identical quantity) when unit prices are available than when they are not. This effect also is found among less price-sensitive consumers.

The mere presence of information on unit prices increases the salience of “price” in the decision making context, making consumers more price-sensitive, which in turn activates the motivation to look for bargains. Even though unit pricing adds to consumers’ information load, it reduces the financial strain of shopping.

Yao, J., & Oppewal, H. (2015). Unit Pricing Increases Price Sensitivity Even When Products are of Identical Size. Journal of Retailing.