What is Unit Price?

Unit price is the price at which a single quantity of a product is being sold. This can refer to the price per unit of measure, such as the price per pound, ounce, or pint. The price per unit of measure is frequently listed on the shelves in a supermarket, so that shoppers can comparison shop among the different brands of products on display. The concept is also used in bulk pricing, to assist purchasers in determining the best possible deal.

Disadvantages of Unit Pricing

While the use of unit pricing might initially appear to be a more transparent way to show prices to consumers, it also tends to focus too much attention on one element of the purchasing decision. Here is what is missing:

Shipping time. If a product needs to be shipped, an extended shipping time may offset a low unit price.
Product quality. If a product has a lower quality level, this may offset the benefit to be gained from a lower unit price.
Product support. If there is minimal product support by the seller, this can offset a low unit price.

Example of a Unit Price

A buyer is offered a quote of $5,000 for 1,200 units (which is a unit price of $4.17), and a quote of $7,400 for 1,800 units (which is a unit price of $4.11). With the unit price calculation, it is easy to see that the latter quote is the better deal for the buyer.