Lets say I can buy 200 of something for $20. but for $60, I can buy 750 of them. How can I quantify the money saved as cost per unit?
Lets say I can buy 200 of something for $20. but for $60, I can buy 750 of them. How can I quantify the money saved as cost per unit?
this is basically the start point and at relatively close scales will work pretty well.
this can also be expressed as a 2 in 10 (20%) bulk discount.
you can add on adjustments if you can estimate other factors like the admin cost (of your time) per transaction, a defect rate cost or spoilage, cost of storage and transportation and so on.
These overheads can sometimes be shared across other products, especially transport and storage.
for longer term stuff you might want to translate this into an equivalent annual (or longer ) cost per year/day of consumption that covers expected consumption with your safety margin.
if you need to account for every element of you cost base to the nearest penny then it can get pretty complicated - but if you’re prepared to make simplifying assumptions like:
“It doesn’t spoil over time”,
“I already have some unused space”,
“i don’t need insurance on storage.”,
“i’m going to ignore any adjustments lower than 0.001 cents per unit (a materiality threshold)”
Whether those assumptions are a good idea or not, depends upon the wider context.