Making Cents: How much are brand names worth?

Mathew Carrick / Columnist

Every time we go to the store, we’re confronted with choices between high-end brand names and “value” off-brand items. (My personal favorite: Cheerios vs. “toasted cereal rings.”) Is paying the extra few dollars for a name brand worth it? Does spending such small chunks of change really add up?

From a purely cost-based view, buying name brands is simply not worth the added expense, especially for everyday staples like cereal. Let’s say it costs around $4.60 for our favorite brand of cereal, “Super Fun Breakfast Bits,” from your favorite company and $2.90 for value brand (fairly realistic numbers). The Kroger brand box will cost about 63 percent of the name brand.

For such small amounts, it doesn’t matter much if you buy “Super Fun Breakfast Bits” every once in a while instead of “Pretty Great Early Mealtime Pieces.” Chances are, though, that you won’t buy cereal just once this semester—and almost certainly not just once this year. If you buy a box of cereal once a week for fifty weeks, buying value brand will save you $85, and that’s almost half a textbook!

Apply this thinking to other things—pantry staples, restaurants, clothing and pharmaceuticals—and you’re facing a hefty difference. This makes buying off-brand a great opportunity to set aside some extra cash!

But wait, aren’t name brands more expensive for a reason? Oftentimes, name brand and value brand products are nearly identical (especially in pharmaceuticals, which are frequently exact duplicates with different prices).

There are some exceptions to this rule, like “creme-filled chocolate sandwich cookies,” but value brands are not usually distinguishable to even the most refined palate. In fact, a recent study  by Bronnenberg et al. at Brown University found that pharmacists, professional chefs and other industry insiders tend to prefer generic value options!

If you’re still not convinced, try doing a blind test between generic and name-brand products. If you can’t tell the difference, aim for the cheaper of the two options! Even if the price happens to be similar, pennies add up to dollars and dollars add up to serious savings.

Now, I’m not a generic brand zealot: it is important to vet products and make sure you’re not getting a product that’s truly poorly made (e.g., the cheapest available toilet paper). But even then, the second-cheapest option will often still carry significant savings without any large tradeoff. The biggest component of price for most name brand products is the marketing put into making them seem more high-quality, not special processes or ingredients used to make them fancier. So the next time you go shopping, think about buying generic!

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