Simple question. At my local grocery store, a gallon of store-brand milk is $1.99. A half-gallon of store-brand milk is something like $2.58. What is causing this weird pricing? Is it some sort of government subsidy program that mentions gallons of milk but not half-gallons? (And no, this isn’t a special: this is the standard price).
To me that looks like a simple error or oversight. What would be the point of buying half as much milk for 59 cents more?
Are you sure it’s not per unit (such as per gallon)
This sort of thing happened when my mom was buying cat food. The small-ish cans were like 48 cents each and the large ones were 44. My mom still bought the small cans because “the can’t can’t eat an entire big can, it’d be a waste of cat food.” :rolleyes:
We assumed it was an error.
I’ve never seen anything like that at my local supermarket. I’d guess that either someone made a mistake in pricing, or that the store had way too many gallon containers of milk on hand and wanted to move them out the door before the expiration date.
Edit: I know you said it isn’t a special, but I really can’t think of any other reason.
Maybe you ought to ask the store manager.
It could just be that they charge what the market will bear: that they’ve done studies indicating that they wouldn’t sell any more half-gallons than they already do if they lowered the price on those. Or that it’s more important to have low prices on gallons, because otherwise large families who buy lots of groceries will shop somewhere else.
I can’t recall seeing half-gallons of milk costing more than gallons of the same type and brand, except maybe on rare occasions when they’re having a sale on gallons. But in my experience half-gallons typically cost well over half the price of a gallon (making the milk more expensive if bought by the half gallon, when you look at it from a unit price standpoint). I assume that other costs, like the cost of making the container and the cost to the store of stocking the milk, are not that much different for a half-gallon than for a gallon.
In retailing, there is the concept of a “loss leader.” This is an item priced lower than its cost, and advertised. The point is to get customers into the store where they will then buy other stuff.
It’s one thing to have a loss leader. It makes sense.
It’s another thing to sell something that renders something else in the shop completely un-sellable (to all but the stupidest or most oblivious people)
WAG: Some people really don’t want a gallon of milk, don’t care about the extra 60 cents (or didn’t even look at the price in the first place), and have to carry the bags home and up 2 flights of stairs and are happy to just take the half-gallon and be done with it. The store knows enough of those people come in that they can price half gallons at $2.59, everyone else can buy the gallon.
I don’t think I’ve ever seen the half-gallon cost more (I don’t always check, though) but I’ve definitely seen them within 20 or 30 cents.
Smaller sizes generally will usually cost more for most things. Consider it a convenience tax.
For instance, 16 oz. worth of yogurt cups will cost more than buying a 16 oz. tub of yogurt. A 20 oz. Pepsi costs the same (or sometimes more) than a 2 liter. It’s the same product, but wildly different unit prices for different sized packages.
I still think it’s an error. I’d buy the extra milk even if it was more physically inconvenient to do so. it would bug me if I felt I had been unfairly penalized for not being able to carry the extra milk.
I was in B&Q once and they had 16 pack Duracell Plus batteries for sale in differently-shaped boxes for different prices. They were the exact same amount and type of battery, but the ones in the packet where they’d been arranged in two rows of eight rather than one row of sixteen were about 30% cheaper.
But this is things being cheaper per unit or cheaper, per same amount. The example in the OP is of an item that is cheaper as a whole for twice as much product. That is wildly different than the concept of things being cheaper in bulk than the same volume of the same stuff in smaller packets.
Unless I am having a brain-fart and the OP’s example does show a mere bulk reduction in price (i.e. twice as much milk actually costs more, but not twice as much)
If your household doesn’t drink that much milk, it makes sense to buy the half-gallon for a few cents more than buy the gallon and end up with spoiled milk in your fridge in a week or two.
Grocery stores do this a lot with milk and eggs because people buy them so often and you want to price them lower than the gas station down the street does. It’s part of the reason milk is almost always found way in the back of the store, so shoppers will always pass by other goodies when their plan is to “just buy some milk.”
Waste cat food when there are cats starving in India?
I have worked in systems analysis at the headquarters of several well-known retailers and retail pricing is very complicated and depends a lot on computer models and trends. If it is a chain, the store manager probably won’t know why if it is priced that way either and you may have a hard time finding anyone who does. That type of thing is controlled at a corporate level and a lot of the number crunching is done by a computer. There are just plain screwups as well. Believe it or not, some people are willing to pay extra for just a half gallon of milk as opposed to a whole gallon. Maybe they are staying in a hotel room and they only have a mini-fridge or they never use a whole gallon before it goes bad anyway. I have turned down buy one get one free deals myself because I really only wanted one of the item and didn’t know what I would do with the extra one. It tends to confuse the cashiers but I walked in willing to pay a reasonable price for something I needed and that is all I wanted.
The same thing happened to me today at Radio Shack. The 4 gb Smart Media cards were a lot more expensive than the 8 gb Smart Media cards. They were sitting side by side and it wasn’t a price tag or labeling error. I can’t wrap my head around that one but there may be some devices out there that can’t take the higher capacity ones and they just want to get the most the can for the lower capacity cards before they discontinue them.
Hence the Pepsi example. A 20 oz. Pepsi will retail about $1.35; a 2 liter of Pepsi retails about $1.99, sometimes on sale for half that. The 20 oz. is 67% the price of the 2 liter despite getting 70% less.
Part of that is convenience tax, part of that is additional packaging/shipping. Same with the milk. The unit price of everything goes up the smaller the package gets.
Note that the OP wasn’t talking about the unit price but about the price per package. So your Pepsi example is relevant only if the 2-liter costs less than the 20 oz.—not just less per ounce, but less per bottle.
Price per package is a determined by a combination of factors. I will attempt to explain.
I worked at Safeway for a dozen years, most of them I was ordering for the entire store. The cost per crate of milk increased dramatically from gallons to half gallons to quarts. This part is key: the total volume of milk was identical in every crate, but the number of crates I ordered/sold was inversely relative to the number of units per crate. I ordered 200+ gallons every day, but only a quarter that same volume of half gallons, and a quarter that same volume of quarts, the reason being 75-80% of what sold was gallons. Not a whole lot of half-gallon sales, even less quarts.
It’s also a matter of labor. The labor cost involved is also inversely relative to unit size; it takes the same amount of labor to stock/restock a vastly lesser amount of halves/quarts than gallons. That’s just how it is.
Lastly, it’s those factors combined with profit margin. Wholesale prices for cases of food from the warehouse, combined with store-level overhead costs, mean the store’s per-item profit is literally pennies. They stay in business solely on the merits of extremely high volume.
Bottom line: it costs more to buy a half gallon of milk because it costs more to sell a half gallon of milk.
I wish I could get a gallon of milk for $1.99 round here. 
However, I did have a similar experience to the OP recently. I usually buy eggs by the half-dozen, because I don’t eat many eggs. Six will last me for a long time. However, I was in Wal-Mart recently (for something else) and looked at the eggs because I did want some. There were no half-dozens, but they had a dozen large for $1.98 (less than I would normally pay for a half-dozen elsewhere), and, next to them on the shelf, 18 large for $1.00 (!!!). I wondered if they had got switched round. I took a pack of 18, and at the checkout I specifically asked if they were really just a dollar. She said yes, so I bought them. I gave 10 of them away. They would be bad before I used them up.
DCnDC, So that’s enough to account for the half gallon of milk costing $5.16 per gallon and the whole gallon costing $1.99 per gallon??
I think I should point out that when I say ‘error’ I don’t mean the price is wrong. I mean the decision to sell both in the same store/place is wrong. I can understand something getting very cheap when the volume per pack increases but it seems likely that selling both of these things in the same place is bad decision making. Unless people are literally not paying attention or really do consider the convenience of carrying away half as much product worth the much higher cost then surely the half-gallon milk simply won’t sell, and will go to waste.
I don’t think I’ve ever seen this for milk, but I’ve seen it plenty of times for soft drinks. But even when a two-liter bottle sells for less, total, than a 20oz, they still sell plenty of the 20oz bottles. I expect that’s mostly from force of habit.
What you also sometimes see that’s amusing is when the best unit price is for the smaller package. At my grocery store right now, a two-pound bag of carrots costs about three times as much as a one-pound bag. There’s no reason to buy the larger bag: If I want two pounds of carrots, I just buy two small bags. Even the five-pound bag is a worse deal than the one-pound.
OK, I was just at the grocery store, and I made a point to look at the milk. Gallons of store-brand milk were $2.28 and half gallons of store brand were $2.58.