Big Long-Term Savings By Substituting No-Name or Store Brands for Premium Brands
We all have our favorite brand names. No matter how value-conscious we might be, each of us – consciously or subconsciously – probably has a few brands that we for whatever reason trust over the alternatives.
In some cases, there’s real merit to it. There are some brand-name items that taste better , and some brand-name products that simply work better. I’ve had my share of both of those. But, I’ve also seen a few examples recently where there was seemingly little difference in the actual items other than the price.
Yes, we know the notion of doing away with a gourmet coffee drink every day is one of those popular examples used in showing how little daily savings can add up. It’s a good point I agree with, in the case that you want to give up something entirely. Which, of course, makes sense quite often.
If you want to keep what you like, but want to save money, there are ways to save money. I previously shared my extremely frugal coffee savings method, which was of course over the top. However, if you simply want to enjoy a regular coffee each work day, there are legitimate ways to save. Simply buy a less expensive brand.
A great example was at a prior workplace where there two types of coffee offered in the cafeteria: premium, and “no-name” varieties. For a medium cup of premium (with a known brand name), it came out to about $2.40. Not exactly inexpensive! However, the no-name “house” variety went for about $1.30 for the same size. Interestingly, talking to the cashier, there were people that regularly bought the more expensive coffee every day. For me, I could detect little difference between the two, having tried each.
So, if somebody gets coffee every working day, the cost of getting the premium version can really add up. Over the course of a year with 250 working days, that comes out to $275. Just for buying a branded coffee over a house variety, with both being the same otherwise.
Okay, so this is quite a departure from coffee! Yet, it’s another area where I noticed a difference in prices that made me wonder why people would spend so much more.
I was in the first aid aisle of a local retail/grocery, and came across what I was looking for: a topical anti-biotic ointment. Good to have around, in case of cuts or minor injury. Anyway, I saw a small tube of a premium brand selling for about $4.50. Nearby on the shelf, there was a store brand version for sale for about $2.50.
Now, when it comes to health care, I’d be instinctively more likely to think about a brand name I trust versus something else. However, in looking at the ingredients of the two items, they didn’t seem to be different based on the labeling. In this case, why pay $2 more?
This can all really add up! Well, think about that coffee example. That’s $275 right there. Then go back to the grocery example. If you can save $2 each week by making substitutions on household goods or food, that comes out to another $260 per year. Just those two changes – switching coffee varieties and $2 in grocery savings a week – can add up to $535 annually.
In this example, just imagine if you did this every year for 25 years. It’s $13,000 saved by simply doing a few painless substitutions. Now, if you took those annual savings and invested them along the way and got a decent 8% annual rate of return, that $13,000 could increase by a lot more. As in, to more than $42,000!. Enough to buy you enough to buy you a couple of cars over those 25 years!
All for making a few painless substitutions in terms of brands!
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Filed Under: General Tagged With: frugal, save money
I do my best to avoid paying for what I call “brand vapor”–the aura around a product. Though in rare cases brand vapor may actually imply higher quality, most of the time the best value products don’t have multi-million dollar brand promotion campaigns built into their price. It’s fun and rewarding to find these gems!
Kurt – it’s smart to understand what’s real, and what’s marketing. Some differentiation can be primarily perception-based.
We recently started using the “eight o clock” brand. Taste just the same once I add the creamer.
Marvin – those savings can really add up. I think in many cases low-cost coffee can be better than more expensive varieties.
We only buy a few brand name products. Colgate is the one that sticks out in my mind. Other than that? I don’t know. I’ll have to go dig around in the cabinet.
Retire by 40 – i can understand toothpaste, in terms of a brand preference. Not sure it can be easily articlualted, but I can see why.
My theory is to try them, if it tastes as good make the change permanent. If not, you can always go back.
krantcents – yes, it’s worth the experiment in many cases.
I only buy name brand Tetley tea. I tried store brands and they have a bitter aftertaste.
I can get Tetley for 3 cents each bag when it is on sale at Costco. The store brands are 1.5 to 2 cents per bag. There has to be some room in the budget for the finer things in life and I do use each tea bag to make 2 cups of tea.
Jane – 3 cents each, versus 1.5 to 2 cents, is not a big deal. I wouldn’t lose any sleep over that one!
We also try to avoid getting sucked into the name-brand thing. It’s definitely a needless cost-driver!
Big cost-driver at times!
I am only particular on the kind of corn we buy. We have to have Fresh Like (this is probably in itself a knock off brand). Anything else I can agree upon to buying the knock off.
Well, it makes sense that we would have something that we simply don’t want to buy generic. Now I’m curious about why that brand is so good 🙂