The Costco Rule of $10 And Other Bulk Buying Tips

If you’re given $100 to go grocery shopping, you can normally get quite a large number of items.  Of course it all depends on what you need for your shopping list, as a bag of chicken or other high priced item can take away part of your budget, but usually those are balanced out by smaller priced items.

A loaf of bread.  Some cups of yogurt.  Cheese.  Lunch meat, whatever you will, you can generally get a pretty good number of items at Costco.

Not so much at Costco.

I love Costco.  We’ve been members at Costco for many years and I truly believe that in spite of the $55 membership fee, we still come away saving money throughout the year.

Still, I’ve learned that there’s practically nothing in the store that we normally buy that is less than $10.  Understanding this has helped me reset my expectations.

We always make a list for Costco, and inevitably, we’d have what appeared to be a short list, and think that it would mean a small total, but would end up getting ‘surprised’ when 12 or 15 items cost between $150 and $200.

It was then that I realized that very few items we buy are below $10 and learned to reset my expectations accordingly.

Now, if I have a shopping list of 10 items, I know that I’m good for at least $100.  In the grocery store, 10 items can result in a bill of $25.

mb-201309cartsGranted, at Costco you’re getting a lot more than you would at the grocery store.  Your 16 oz bottle of ketchup for $1.49 at the grocery store turns into three 48 oz bottles at Costco for $9.  It still saves you money in terms of unit price, but the overall impact from a cash flow perspective can be jarring.

Budgeting.  Creating a budget is key.  As I mentioned above, when I make a list, I ballpark around $10 per item, usually a bit more, depending on the list.  There are still some items we can get for under $10, like a four-pack box of graham crackers or a container of feta cheese, but those are always offset by higher priced items, like 1120 baby wipes for $25.

Reality.  We very rarely fall into the trap of wasting food from Costco.  Even though we get larger quantities, we tend to buy stuff that:

  • we know we will use because it’s part of our everyday usage
  • lasts a long time
  • have ideas in mind for items that we haven’t purchased before.

Many people fall into the trap of buying something because it looks good, but when they get home, they don’t have a use for it.  So, they stick it on a shelf or in the freezer and there it sits until it gets pushed to the back of the shelf and is discovered way after it’s no longer useful.  We make sure that we have plans for whatever it is we buy.  In fact, new items often generate excitement because we’re looking forward to trying something new for the first time.

Rotation.  We have a shelf in the basement that’s a secondary pantry.  Most of our dry foods from Costco go on this shelf.  I do a couple of things here that ensures that we use all of our stuff:

  • Old before new.  If we have something that we’re buying more of, I’ll put the newer stuff in back to make sure that the older stuff doesn’t expire
  • Re-organize while putting away.  When I put away our stuff from Costco, I’ll reorganize the shelves.  I’ll slide things around to make room for new items.  I’ll pull stuff that got shoved underneath something else back to the front.  I basically come away knowing everything that’s on the shelf, and if it’s an item that has sort of been forgotten, the process of putting new stuff away gives me a reminder to take a look at the items and make note of what we have to use.

Costco and other warehouse stores can be a great source of savings, but only if you make sure you use what you buy, and also have a realistic expectation going in.  I’d have to think that the two biggest reason people end up quitting is because they end up wasting money or because they deem it ‘too expensive’.

Both of these can be properly managed with the tips I’ve lain out above.

Readers, what tips do you have to share for successful Costco shopping trips?

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Shopping Tip: A Legal Way To Get Around Costco Coupon Limits

I’ve posted in the past about Costco coupons, and how they track and combat people trying to skirt the limits that they impose on their monthly coupons.  Many products have a quantity limit, usually the better the deal, the lower the limit you can buy at the discounted price.

One thing I’ve found is that there’s a completely legal way to get around this policy and take advantage of the savings: Call on your friends and family for help.

Since Costco tracks purchases on your account, you can’t simply exchange coupons.  Instead, if you want extra coupon savings, you have to call on those you know to purchase items for you, then collect the items and pay them back.

This assumes, of course, that the person you’re exchanging with would have no need for the coupons themselves, and there’s always the matter of having to go through the hassle of exchanging the product and the money, but sometimes the deals are so good, it’s worth it.

And the best part is that Costco can’t punish you for exceeding your coupon limit, because they never know!

My parents drink Taster’s Choice instant coffee.  We never do, so whenever the coupon comes around, we usually purchase it for them and then exchange the money and coffee when we see them (which is regularly).

We’ve also done this exchange with my parents getting stuff for us, as well as a recipricol exchange with our in-laws.  In the end, this has helped us all save a great deal of money.

Many products have such a high limit that this doesn’t come into play, but on those items where the limit is one or two, and you can benefit from saving more, doing such an exchange can be a very saving savvy move.

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Price Increase Alert: Costco / Kirkland Baby Formula

At one of our recent trips to Costco, we passed by the baby formula section.  We were big fans of the Kirkland formula during Little Boy Beagle’s formula needing days.

(Side note: To those who will point out that breast feeding is the best and cheapest option: We know.  We tried.  Eventually, formula became the necessary option.)

mb-201101babyhandHaving looked around and settled on the Costco / Kirkland brand, both the price and the packaging were etched into my memory.

So, while walking around the section, a new method of packaging jumped out at me as I passed by.

Uh-oh.

Anytime a package changes, I immediately jump to the conclusion that the company packaging the product in question is changing something in some way to present a price increase, most often by giving less product at a price that works out to a higher unit price.

Once again, I was right.

With the old packaging, you received two canisters, each containing 25.7 ounces of formula.  The price for the total 51.4 ounces was $19.79.

With the new packaging, you get a single 36 ounce container of formula which costs $16.49.

I have to say that Costco was as creative as can be in presenting this.  At first glance, the consumer sees a taller container than they got before, which offsets the fact that they used to get two.  They also see a lower price, which makes them think they’re getting a pretty good deal.  In fact, I bet some shoppers probably think they’re getting a better deal.

Not so fast.

By cutting 15.4 ounces from what you get, they cut 30% of the product you receive.  Yet the price went down by a mere 17%.

Hmmm…

What this works out to is a price per ounce increase from $0.385/oz to $0.458/oz.

This results in a 19% price increase for Costco / Kirkland Baby Formula!

Look, I get the fact that prices go up.  This doesn’t bother me.  But, very few products have gone up by 19% in cost over the past year.  The fact that Costco is sneaking this in by way of attempting to confuse the customer disappoints me.

My wife raised a good point; They’re still cheap.  Before, they were about half the cost of the name brand formulas such as Similac and Enfamil.  Now, assuming those companies haven’t likewise raised their cost by 19%, they’ll be 35-40% cheaper.

Still a pretty good deal.  But you know what?  Other stores (such as Target and Wal-Mart) have lower priced formula as well.  In the past, it was cheaper than the name brand but still not as cheap as Costco.  If they are now more competitive in price, Costco could end up losing customers altogether if enough customers realize the big jump that just took place.

Here’s the rant portion of this post:

I love Costco, but I have realized that you really have to keep an eye on them.  I am certain that one of their strategies is to bring customers in with ultra-low prices, get them hooked, and then raise the prices.  This isn’t groundbreaking retail strategy, but I put Costco on a higher level of expectation than I do most retailers.  Why?  Because Costco is the only retailer I shop with for which I pay the privilege of shopping with.  When I hand over my $50 membership fee every year, I am saying, ‘Yes, I agree you are awesome enough to pay $50 to walk through your doors’ but you know what?  I’m also holding them to a higher standard.

The price increase of 19% is bad enough.  But, where they haven’t ‘earned’ their membership fee on this one is that they implemented it in what I consider a sneaky way.  I would have much rather seen them just raise the price on the stuff they used to sell from $20 to $24 and be done with it.  Now, you know darn well that there are customers walking out who aren’t paying attention and are ending up shorting themselves on formula, thinking they are getting the same amount they used to, or other customers who aren’t unit price shoppers who are going to have a hard time understanding why their formula costs spiked.

Costco has to make money.  I get that.  But sometimes companies go too far in their quest to make money.  I’m not saying Costco went too far, but a near 20% price increase and hiding behind ‘new packaging’, well that’s toeing the line into questionable territory.  In my opinion.

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Costco Coupon Policies – Truth or Fiction? You Decide

We undertook our monthly trip to Costco last week to take advantage of some coupons specials as well as stock up on some items that we needed.  It was a good trip, and we had a friendly, chatty cashier that shared some Costco coupon information that I found interesting.  Whether these are true or not, I have no idea, but it’s interesting to note.

  • You only need one coupon from your coupon book – This is sort of true and has been a somewhat frustrating policy for me.  See, many people, myself included, observed a couple of years back, that all of the barcodes from the coupons were the same for the regular everyday products.  Many people, also myself included, surmised that you only needed one physical coupon, and saved clipping / tearing out.  This worked a few times, but at one recent Costco trip, the cashier insisted that she needed every one, so we had to stand there tearing the rest out of our coupon books.  Since then, I’ve been safe and have taken out the ones we needed.  The cashier said that it’s up to the cashier and sometimes a store policy on whether they need every one or not.  This store (and cashier) obviously had a loose policy as she didn’t even scan a single coupon that I had, instead scanning one she had sitting on her register.
  • You can’t exceed the item limit on a coupon in a single visit – This is true.  Many of their coupons have a limit on how many you can buy and get the discount.  I learned that the hard way once when I wasn’t paying attention, and bought two of something, only to see after I finished checking out that I didn’t get the discount on the second product.  I returned the product before I even left the store.
  • You can exceed the item limit on a coupon over multiple visits – According to our chatty cashier, this is also true, but you don’t want to do this.  If you present the coupon multiple times during multiple check-outs, she said that it will actually ring the discount through.  However, she also pointed out that their system keeps track of every single purchase (and coupon) you ever make, and that they have a solution for people that they find ‘game’ the system.  They will start skipping sending you coupon books in the future!  And, to get back on their mailing list, you have to get on your hands and knees, and beg and grovel to at least two customer service representatives while singing La Cucaracha.  OK, I made that last part up.  She really didn’t know if/how you got back on the mailing list.

I think Costco is great and has saved us a lot of money over the years.  I don’t think it’s necessary to try to scam them as I think they provide great value.  It encourages me to know that they combat people trying to scam them, because they realize that if they allowed it, this would mean higher prices for everybody, including their honest customers.

Again, I’m not sure if these Costco policies really are true, but I figure it was worth sharing.

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