Don’t get me wrong, I love Costco. But today, I want to pose the following question to you:
Are you really saving money at Costco?
If your experience is similar to what mine is usually like, then the answer is probably not. Here’s how it usually goes. We drive over to Costco planning to get a few items. We walk in, get some free samples, do our shopping, and walk out with a cart full of stuff, at least half of which we didn’t plan to buy. Yesterday, we walked out with a receipt for $140.20. I call this the Costco Effect.
In most cases, we will get a volume discount for buying items in bulk, but in the end, are we consuming more than we need or really wanted to in the first place?
Today, I examined some of the stuff we bought yesterday at Costco. I decided to buy a reasonable amount at Safeway and return the Costco items. I returned 5 items at Costco worth $39.85 (pre-tax amount) and bought similar items, just in smaller amounts, at Safeway for $12.66. The five items are pictured above: paper plates, salsa, Milano, tortilla chips, and San Pellegrino mineral water.
Here’s my analysis for each item.
Paper plates (Costco: $9.39 for 620, Safeway: $2.49 for 26)
We got paper plates because my sister, her husband, their 2 kids, my mom, my brother, and his wife are visiting this weekend. We already have some at home but somehow decided that we need 620 more! After all they’re only 1.5 cents each. But I think 26 slightly higher quality plates will be plenty, even though they’re more than 6 times the price per plate at 9.6 cents each. Buying the right amount here saved us $6.90. We can always buy more plates when we need them.
Salsa (Costco: $6.49 for 48 oz., Safeway: $2.49 for 24 oz.)
I got some salsa because I’ll be making breakfast burritos for our guests. It’ll also go with the tortilla chips below. The salsa from Costco tastes great, but I think 24 oz. will be plenty. The unit price actually ends up being cheaper at Safeway in this case. Savings of $4.00 here.
Milano (Costco: $6.99, Safeway: $3.00)
My wife wanted these, and they’re probably good to have around for our guests. The Costco one is even individually packaged. But I don’t think we’ll be eating 40 Milanos this weekend or should be eating that many. One package from Safeway should be sufficient. Savings of $3.99 here for buying the right size.
Tortilla Chips (Costco: $4.99 for 40 oz., Safeway: $1.67 for 12 oz.)
We got some tortilla chips for some crab dip that my wife wanted to get at Costco and to accompany the salsa. I didn’t think we needed 40 oz. of chips, and the chips at Safeway were on sale. A 12 oz. bag should be enough for the weekend. Savings of $3.32 here.
San Pellegrino (Costco: $11.99 for 15, Safeway: $3.00 for 2)
It’s nice to have something special to drink with guests over. We like to mix San Pellegrino with Orange Juice for a refreshing breakfast beverage. Costco had a great deal, and I really enjoy drinking Pellegrino, but 15 bottles was just way too many. Paid $1.50 each for 2 at Safeway and returned the 15 bottles that were only 80 cents each at Costco. Saved $8.99 here.
Total at Costco: $39.85
Total at Safeway: $12.66
In the end, for the 5 items I returned, the difference ended up being $27.19. I probably could have returned some other items, but Mrs. Frugalee might not have been happy, and we don’t want to do that. I realize I’m not really “saving” the $27.19 because I’m getting less stuff, but I think buying only what we need when we need it will help us toward our goal of financial independence.
How do you save money at Costco?
Costco isn’t bad, but it’s designed in a way to get you to spend on impulse. It’s even tempting to frugal people because we know we’re usually paying less per item. I think the best way to save money at Costco is to have a list and try your best to adhere to it. Also, it’s probably best to examine whether or not you’re truly getting a discount for buying in bulk. For the salsa, the unit price was actually cheaper at Safeway (although quality may be different). Buy only what you need. Buying the right size may save you money in the end even if it costs more per unit.
My goal in writing this post is not to deter you from shopping at Costco. Instead, I want to provide a perspective that may get some people to examine whether or not shopping at Costco (or similar type of store) is really saving them money.