The packaging of a product not just appeals to the eye but also renders your rationality useless because we, as consumers, will always compare one product vs the another and not the bigger version of that product with its smaller version once we concede that our consumption levels match that of the bigger.

One such instance where this bias is recurrently damaging is when we buy our shampoo. For instance, a small sachet that just suffices for a single was costs for 2 (all numeric figures in INR) while the smallest available bottle costs for 135. this bottle will fulfill thirty to forty (maximum) washes nearly for which if we used the sachets, it would have cost us a maximum of 80. Even if you add for the costs of packaging, economies of scale would not let the cost breach 100 (not even 100 in fact!). Beisdes a bottle will sometimes entice to use a bit more shampoo than we can use in a wash whereas the sachet has a definite amount which has to be used entirely.

What that 35 implies is the cost of getting the consumer adapted to the product and charging a higher price to him. This process is also called price discrimination – you  determine people who can pay more for your product and charge a higher price to them. Because people are attracted towards the bigger version of the product for reasons of convenience and saving transportation costs, the company exploits this and instead adds these costs to the bottled shampoo.

Hence all that you save from transportation costs gets added to the product costs! You can apply this theory to other consumer durables as well. Therefore the next time you buy something, do ‘try’ to buy small and more of it.