## Friday, 29 April 2011

### Milking it

I went into Tesco yesterday to get two 1-litre bottles of the filtered milk that we use. For the last year or so it has been priced at 89p for a 1-litre bottle, but you could get two for £1.50. Yesterday I found that the price had been increased to 95p a bottle and the offer changed to three for £2.50. These supermarkets have a wonderful knack for obfuscating their price increases!

Let’s have a look at this from the point of view of the customer, who might choose to buy one, two or three bottles.

The price for one bottle, gone up from 89p to 95p, is an increase of 6.7%.
The price for two bottles, gone up from £1.50 to £1.90, is a staggering increase of 26.7%.
The price for three bottles, gone up from £2.39 (£1.50 + 89p) to £2.50, appears to be an increase of only 4.6% (but see below).

But I do not want to buy one bottle or three bottles! We always buy two bottles, one skimmed and one semi-skimmed, a purchase which suits our needs and our small fridge perfectly. So, we must either accept the 26.7% increase or buy more milk than we really want.

But even if we go for the 3 for £2.50 option, over time the increase is greater than the 4.6% indicated above. After two purchases of 3 for £2.50 we will have spent £5 for 6 bottles, whereas we would have got the same 6 bottles previously in three purchases of 2 for £1.50, spending £4.50 in total. So the 3 for £2.50 option really constitutes an increase of 11.1%.

Try working all that out on the spot in the supermarket!

#### 1 comment:

1. Love it!
At my local Tesco they were offering 3 cartons of orange juice for the price of 4!
I do hope I wasn't the only one to notice...but I can't promise.