## Thursday, October 30, 2008

### Tracking Prices: The Sales Cycle Game

Every deal spinner knows that the key to saving money at the grocery store is by stocking up on staples when prices are the lowest. But how do you know when a price is truly the lowest? How can you tell whether the “price shocker” sale price really is a good deal?

The answer is two-fold. It involves a little homework, but is well worth your time.

1. Sales Cycles – Most grocery stores rotate their sale items as they rotate their inventory. On average, this is about a 5 week cycle. Don’t believe it? Try saving the weekly ads from your favorite grocery store for the next month or two and see if a pattern emerges. In general, high sales volume items like cereal, soda, canned goods, and meat go through a monthly cycle. At my favorite store, the small boxes of Cheerios go on sale 5 for \$10 every 5 weeks or so. I save up my General Mills coupons and stock up on Cheerios during this sale. I don’t pay more than \$1.50 a box, and if I happen to have \$1/1 coupons, I only pay \$1 a box. Using this approach, I never need to worry about running out of Cheerios and having to pay full price for a box.
2. Price Book – The second component to knowing when a sale price is a good deal is through keeping a price book. A price book is simply a listing of common items that you buy frequently and the amount you pay for them. Over time you will begin to recognize how much you pay for an item on a regular occasion and how much you pay for it when there is a good sale. It’s also helpful in comparing prices between stores and particularly helpful in comparing prices between a grocery store and a warehouse club. If you record the ounces for an item, you can easily calculate the price per ounce, and then compare that to the price per ounce at a warehouse store. The Diva family belongs to Costco, and since the sizes of items are significantly bigger at Costco than at the grocery store, I calculate the price per ounce on items we buy frequently to determine which is the better value. While most items are cheaper per ounce when buying in bulk, it was quite eye-opening to learn that several were not and were better deals buying the normal sizes at the grocery store.

Here are a few great sites for more information on price books.

Organized Home

Get Rich Slowly has links to price book templates.

And finally, here’s a recent SmartMoney.com article on “8 Ways to Cut Your Grocery Bill.”