The perils of dynamic pricing

I’ve been doing a lot of running around lately, and I have a tendency when out and about to look around at the prices for the things we buy a lot.  Like food.  Although I can barely remember to pick up dog food before we run out, or to make my kid’s dental appointment, I have a decent memory for prices because I’m genetically engineered to avoid being ripped off.

Today I made my monthly (bi-monthly?) trip to Ralph’s (Kroger).  Let me first say that Ralph’s, you have a LOT of nerve saying you have low prices.  Most of the foods in the store were not just priced a little higher, but a LOT higher.  We’re talking a buck or more in some cases.

Of course, I’m not talking about the foods I was there to buy: Pad Thai noodles, sliced water chestnuts, and ginger (which, at the same price as Trader Joe’s, is refrigerated and of much higher quality/freshness).  In fairness, on my way out I spotted organic chard for the same price as at Whole Foods ($1.99 a bunch) and organic carrots for $.79 a pound and made off with both on impulse (whoo, I really like to live big, don’t I?).

Clearly Ralph’s does all right on some items (grapes, for example, were competitively priced on sale, as were apples), and makes up a lot of ground on others (you can get spanked buying detergent there, and the pasta was at least $.20 more per bag).  Beans in bulk at Whole Foods cost less per pound than conventionally grown dry beans at Ralph’s.  That’s how dynamic pricing works:  They grab you for the sale, and grab you somewhere down south for the rest.

I was particularly peeved by the price of Fage yogurt.

Mmmm. How much are you willing to pay to get your yogurt fix?

Like many of my students, I really like Fage, but probably unlike my students I know what Fage costs nearly everywhere a person can buy it.  Fage has really, really dynamic pricing (pricing that changes with inventory, season, or the whims of some evil genius).  Here is a cost breakdown of normally priced Fage in my ‘hood, per 5.3 oz container as of yesterday, 10/17/12:

  • Ralphs:             $1.69
  • Trader Joe’s:   $1.49
  • Target:              $1.42
  • Costco:              $1.09 – but you have to buy a box of 12 in flavors                  chosen for you

Now, this doesn’t include the sale prices — every so often Target will offer 10 containers for $10.  The trick with Target: Realize that you don’t have to buy 10 to get the offer — it’s usually just a suggestion if you read the fine print (with almost everything in the store on sale).  That sale brings the yogurt to an all-time low of $1 per.  When this occurs one of our shelves looks like a wall of yogurt (after checking to be sure we will consume them all by the expiration date; always always check: even at Costco, you can get an extra week — meaning it’s fresher —  if you LOOK).

Now let’s do the math (groan).  The difference between the least and most expensive yogurt is 55%.  That’s not competitive pricing, Ralph’s, that’s highway robbery.  Even if you didn’t want to go to Costco (and pay the yearly fee and buy 12 at a time), the difference between Target and Ralph’s is still 19%.  For ONE container.

If your entire bill at Ralph’s averages those kinds of price hikes, you’d spend an extra $19 extra for every $100 you spend at the market.

Because you probably aren’t insane, and don’t want to keep charts and graphs with you on the prices around you, you might consider an awesome app like one of these, which will give you, in real time, the prices of items located nearby. (Running all over town only costs you more if you’re in L.A. burning off gas at $4.59 a gallon, but if you scroll down on apps like Red Laser, you can see the prices everywhere — even online).

What else can you do to avoid the perils of dynamic pricing while reaping the rewards of the occasionally low price?

  • Some other tips on saving money from the USDA using healthy foods here.
  • How to feed a family on $100 a week here.
  • Don’t buy impulsively!  Buy what you need and get out of there! (This from the lady who succumbed to the 3-pack of Classico pasta sauce on sale at Costco after the kid sampled bread slathered with the stuff.  It was $5.49!)
  • Eating fruits and vegetables in season is also very cheap: check the stickers, and if that apple came from New Zealand, it will be more expensive than the fall apples currently in season from California.
  • Buy from a Farmer’s market or CSA (Community Supported Agriculture) whenever you can.  First, the stuff will be in season, and it will be a LOT more fresh.  Second, the prices will typically be lower, and farmers are very generous with people they know (“Here, try this new orange, have an extra…” — they do that all the time).  Third, it’s fun, you’ll learn about food and what’s in season, and how about supporting farming right where you live?

Truly though, nothing beats actually knowing the price of the basics you buy all the time.  The world of marketing really is dynamic, but typically we are not: we buy the same sorts of foods every week.  Those are the prices you really need to memorize.  Taking a minute could save you a lot of money over the course of a year.

We buy about 10 yogurt containers a week.  I don’t always buy them at Costco, but I try.  Over the course of a year, buying them there saves $31.20 over Ralph’s, and about $17 over Target.  If we could manage that kind of savings on 10 things we buy regularly, we’re starting to talk about some real money!

Before you suggest I give up Fage and save even more money, I’m just going to say: Fage and strong black tea bring me happiness and civility in the morning, and you can’t buy that in too many places for $1.09.  Don’t you take my sunshine away.

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4 responses to “The perils of dynamic pricing

  1. I wonder if anybody sufficiently geeky has plotted out how much time it takes to pay for your Costco membership in “savings.” If it’s 4 months is starting to harsh my mellow.

  2. Hey, that last comment took out my > and <‘s:

    It should say, if it’s < 2 months I’ll be happy. If it’s > four months, it’s starting to harsh my mellow.

  3. I think it would depend on how much you buy. Some people buy so much they must make up the difference in a week. Um. I can’t justify our belonging there on the strength of yogurt, lactaid pills and dried dog jerky. Maybe the occasional electronic device and the metric ton of samples the kid ingests makes up for it in some way…

  4. Valorie Campbell

    The minute I saw Mr. Rosenberg’s comment, “If anybody sufficiently geeky…” I took it as a personal challenge! I’ll do some calculations and get back to you. After living in the UK a few years and paying the food prices there (not to mention experiencing the lorry driver’s strike of 2000 when no food could get delivered to the stores), I wanted to come home, get on my knees and kiss the floor at Costco. PS: Check out the organic beef patties for $4.50 a pound, and the Trident Seafoods Wild Alaskan Salmon Burgers for just over $1.00 a patty.

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