Building a useful price book is not nearly as difficult as many people imagine.
You do not have to spend a week visiting every grocery store in town, furtively writing down prices while looking over your shoulder to see if the manager is coming. You do not have to spend hours laboring to build complicated linked spreadsheets in Excel. You do not need to buy an iPhone.
Follow this simple plan and in just a few hours you will have a functional price book that will save you hundreds of dollars this year, possibly thousands. Would you take a job that paid $350 an hour? I’m betting yes.
Step 1: Purchase a small, loose-leaf binder, and lots of pages. Mine is three inches by five inches. I think it cost $6. The first important point here is portability – you want to have your price book in your hand while you’re in the grocery store, so keep it small. The second important point is to make sure your price book is a loose-leaf binder, not a spiral-bound notebook. Why? Because as you add pages, you can easily keep them in alphabetical order for easy reference on the fly. At this stage, iPhone apps and spreadsheets add unnecessary complexity. Avoid them if you can bear it.
Step 2: Collect your grocery receipts. If you have your old grocery receipts filed away, pull them out and have a little celebration: you hold in your hand the power to lower your grocery bill substantially in under an hour. If you don’t, grab an envelope and start hunting: check your wallets, old grocery bags, even the junk drawer in the kitchen and the front of the fridge. Half a dozen receipts is enough to get you started, and from now on, commit to keeping all your grocery receipts. They are a treasure trove of information.
Step 3: Collect local grocery fliers. Rummage through the recycling bin and pull out a few weeks worth of fliers, and grab the current ones from the weekend paper. You can also find current fliers online. Commit to perusing the fliers every week – once you catch the price book bug you’ll love doing this, trust me.
Step 4: Choose 10 items you purchase every week. Just 10. You might select items that soak up a disproportionate amount of your budget, like boneless skinless chicken breasts, wild salmon or organic shade-grown coffee. You might want to track items that vary widely in price or go on sale often (like toilet paper and canned soup), or expensive foods you suspect you can get a better price on if you buy in bulk (like pork tenderloin and granola). Whatever they are, make sure you buy these products regularly so you’ll see a benefit right away.
Step 5: Create one page for each of your 10 products. This is where the rubber meets the road. First, sort through your receipts, find the items you’re interested in and record the following details: date, store name, brand name, price paid, and standard-unit price. Then flip through the flyers, find examples of your 10 products, and record the same details.
The last figure – the standard unit price – is the magic number. To get this number, you must first decide what the standard unit will be. If you click on the example just above, you’ll see the standard unit is price-per-Litre, but I could just as easily have chosen price-per-100mL — the magic is in the standardization, not the unit. For example, if you’re tracking chicken you will likely use a standard unit of price-per-pound, and for toilet paper your standard unit will likely be price-per-roll. (For a while in my early days I was doing price-per-sheet, which was a little crazy.) For eggs it would be, well, price-per-egg, or price-per-dozen. You get my drift. If you have trouble with the math, Online Conversion will help immensely.
Step 6: Compare the standard unit prices and choose the least-expensive option. You’re done! Over time, you’ll add more prices, and you’ll get a better idea of what things cost. You’ll also discover that the cheapest isn’t necessarily the best quality; in the case of canned tomatoes, I choose to buy the PC Blue Menu diced tomatoes because they have no added salt and taste great. I do like the Pavoncella brand better, but I not so much more that I’m willing to pay 83 cents more per can.
I know what you’re thinking: “You did all this work to save 83 cents on a can of tomatoes?!”
Yes, yes I did. And you will too, just do the math.
Let’s say I use two cans of tomatoes each week, which I do. If I buy the Pavoncella tomatoes for $2.37 per can, I’ll pay $246 for tomatoes each year. If I buy the PC Blue Menu for $1.54 per can, I’ll pay $160. That’s a savings of $86 each year, and that’s just on tomatoes. And because I know that I’ve found the cheapest price, I can confidently buy two dozen cans of tomatoes for my pantry, so I don’t have to keep going back to the store every week (more on this later in the series). The point is, if you save comparable amounts on all 10 of your products, that’s almost $1,000. For one or two hours of work.
That’s the power of a pricebook.
Keep reading Part 3: Overcoming hurdles to making a price book
Go back to Part 1: Why make a grocery price book?
Or return to the series homepage: Pricebooking 101