- Jessie Jimenez
Investopedia describes bulk buying as "something you don't need a lot of at a price you can't pass up." Do you need 10 pounds of sugar?
Of course not, but the 1lb bag costs $4, and the 10lb bag costs $7. Why spend $4 for a pound of sugar when you could pay $0.7?
But, unless you own a bakery, that last pound of sugar is not worth the same to you as the first pound. You are going to use the first pound. The other 9 pounds are going to sit there.
Sometimes just buying what you are going to use ends up being cheaper, even if you pay more per unit. Your wallet waves goodbye to $4 or $7, and you use only 1 pound of sugar either way.
This is "marginal utility" - You really wanted/needed a burger.
If that 1 burger costs $5, but you can get 14 burgers for $14, it is hard to pass up those other 13 burgers! That's $1 per burger; a way better deal, right? Well, what are you going to do with all those other burgers?
Eat yourself sick? Instead of looking at just the cost per item or quantity, look at the marginal utility too, so you don't end up saying "I can't afford to save so much!"