Thursday, September 19, 2013

A Tale of Two Price Points: One Example of The True Cost of Convenience Foods

Anyone who's been to one of my presentations or workshops (or read my book) knows that I'm always harping on about calculating per-pound (or per kilogram, depending on your preference) costs for food items. For many types of foods, it's a big eye-opener to see just how much more you're paying for a convenience-type product versus buying the whole, unprocessed food.

There was a good illustration of this recently in the sales flyers, so I thought I'd share it here as an example of why you shouldn't buy into the convenience product paradigm.

This example is for a really basic food that is a staple in most frugal households: carrots. On the same week, there were two different "deals" available:

At first glance, store #2's offering seems like a pretty good deal to a busy mom who has to pack school lunches: single-serving bags of precut "baby" carrots - no effort required, just drop a bag of carrots in the lunchbox and you're done - and only 25 cents per individual serving package! Processed food manufacturers are clever, and they price point items so they *seem* like a good deal - just $1 to save the trouble of having to do it yourself!

Let's take a closer look, though, and calculate out the per-pound cost for each deal:

 Suddenly, things aren't looking so great for deal number 2: It's over NINE times the cost of deal #1! But it's SO convenient, right?

Well, let's see :)

I went into my kitchen and weighed out a pound of carrots on my digital scale. I then got my husband to time me while I peeled them and cut them into sticks. Total time? A whopping 4 minutes!

With this information, we can easily calculate the "hourly wage" of slicing our own carrots. We're saving $1.59 per pound doing it ourselves, and the task takes 4 minutes, which means you could complete it 15 times in an hour. That works out to an hourly wage of $23.85 ($1.59 x 15).

That's a pretty good return on your time investment, considering that that is $23.85 an hour with no taxes or deductions (if you've ever calculated what you actually earn per hour from a "real job", you'll know that's a pretty decent rate of pay).

This type of return for time invested on food-related activities is typical. In fact one reader of my book calculated that she saved $300 on groceries in one month by spending 5 hours using some of my techniques and strategies - an hourly return of $60 an hour! I don't know about you, but I've never earned close to $60 an hour after taxes and deductions from a "real job" and I have a Masters degree :)

What this clearly demonstrates is another point I always try to drive home: Most people considerably OVERESTIMATE how much time convenience foods are saving them, and severely UNDERESTIMATE how much extra they are paying for that little bit of convenience.

Those little bags of prepackaged carrots also spoil very quickly (since they're peeled and have a lot of exposed, unprotected surface area). Not to mention the fact that they have a horrendous amount of packaging per total volume of carrots (outer bag plus 4 inner bags). The 10 lb bags of carrots keep very well in my experience (we often buy 3 or 4 of them in the fall when they go on sale and keep them in our second fridge in the basement). If you don't have a lot of storage space, you can split a bag between 2 or 3 families to create very manageable amounts.

The moral of the story? Investing little bits of time here and there on he right types of food-related activities has a HUGE payoff. It really is worth it to do it yourself! 

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