Better Deal Mathematically: gift card for store selling postage stamps

[Timbre]

I have a $40 gift card to a store that sells postage stamps. The gift card was free to me. It was a birthday gift. The store sells Forever stamps (current face value of 55 cents) for 60 cents each. In order to use the entire gift card, I could purchase 80 Forever stamps for $8 out of pocket. The store also sells a "lot" of 300 33 cent face value stamps with a total face value of $99 for $70. If I purchase the latter, it would cost me $30 out of pocket.

Mathematically, paying $8 out of pocket for $44 worth of Forever stamps means that I would have paid 18% of the face value for those stamps.

If I chose to purchase the 300 33c stamps for $30 out of pocket, I would have paid 30% of the face value for those stamps.

Based on the out of pocket costs and the percent of face value paid, the first option appears to be a better deal.

Would there be any mathematical justification for the second option being a better deal? I have heard people say it's better financially to use a gift card on a sale item, vs a full price item so your get a better value, but in this situation, buying the over full price stamps yields a better result out of pocket and percent of face value wise.

 

[tkhunny]

"mathematical justification"
"heard people say"

These are VERY different matters.

"better financially"
Practical considerations

What if you need 85 stamps?

Far too subjective to generate a definitive opinion.

 

[Timbre]

On a practical basis, I will use all of the stamps.

I could change the scenario around and use another example.

Suppose for my birthday, I received a $40 gift card to a store and the only thing of interest to purchase are cans of tuna that sell for $1 each.

The store also has a deal where if you buy 100 or more cans of tuna, the cost of each can is 70 cents.

The choice would be to use the gift card and purchase 40 cans of tuna for $0 out of pocket or use the gift card and purchase 100 cans of tuna for $30 out of pocket.

On a practical basis, I would consume all the cans of tuna.

The situation is the same as the stamps. Pay full price for the tuna and have a low out of pocket net cost, or use the gift card on a "sale" price but have a higher out of pocket cost. Is there a mathematical justification as to which scenario is the better deal or is the above example a preference issue and not a mathematical one?

 

[lev888]

Will you keep buying tuna after the purchase of 40 cans? I think to compare apples to apples you need to modify the first scenario so that eventually you end up buying the same number of cans as in the second - 100.
A. Buy 40 cans for $0, then later 60 cans for $60 - total is $60
B. Buy 100 cans for $30 - total is $30
So option B is better.

 

[Steven G]

I disagree that you think that the 1st $40 is free. I would buy the stamps that give me a better deal ignoring the $40 off.

 

[Timbre]

Will you keep buying tuna after the purchase of 40 cans? I think to compare apples to apples you need to modify the first scenario so that eventually you end up buying the same number of cans as in the second - 100.
A. Buy 40 cans for $0, then later 60 cans for $60 - total is $60
B. Buy 100 cans for $30 - total is $30
So option B is better.

Thank you for the explanation and example.

 

[Timbre]

I disagree that you think that the 1st $40 is free. I would buy the stamps that give me a better deal ignoring the $40 off.

On the stamp scenario, I consider the $40 free because the gift card was a gift and I paid nothing for it. If I did not have a gift card, the second option is a better deal. With the gift card, the first option is a better deal because the out of pocket cost and percent of face value cost is lower.

Which option is a better deal to you? Are the lowest out of pocket cost and lowest percentage of face value the ultimate test of whether a purchase option is the best deal?