Monday, November 2, 2009

The new big C2 and economies of scale

At the grocery store a few days ago, rising off of the shelves like a torpedo, the new big bottle of C2 caught my eye.

I do not know if this is a new thing, or just new to me. This is 1.5 liters, the same size as a bottle of Pepsi or Coke. Before this the biggest bottle available was 1 liter, and that was only sporadically available.

It's about time we started getting our groceries in larger volumes to save on costs. I feel like such a chump when buying milk in those 1 L cartons, with the knowledge that America buys their milk by the gallon (3.78 L).

One of my favorite principles of economics, which people do not seem to take advantage of as much as they should, is economies of scale, the principle that per-unit cost decreases as output increases. In other words, it's cheaper on a per-unit basis to buy goods in bulk.

The 350 mL bottle of C2 costs P14.25, while 1.5 L bottle of C2 costs P32.25. That means that the 1.5 L bottle is about double the cost, but has more than four times the content.

Buying the 350 mL bottle is essentially paying double what you could be paying. So, yeah. Think about it.