The other day I started thinking about the laundry market, because that’s what I do. HEY. I NEVER CLAIMED TO BE COOL.
Specifically, I was thinking about Proctor and Gamble for an article I’m planning on writing about the company for a competing website that for some reason continues to invite me back. Yeah, I don’t get it either.
Essentially, my theory is this. In today’s world where consumers are spending more and more on stuff like health care, education, and layers upon layers of cakey goodness, they’re forced to cut corners wherever possible. An easy way to do this is to switch to generic brands of some of Proctor and Gamble’s most profitable businesses, like laundry soap, shampoo, and toothpaste. I recently switched from Gain to the detergent above there, with pretty comparable results.
Plus, take a look at Proctor and Gamble’s earnings over the past four years:
2011 — $11.8B
2012 — $10.8B
2013 — $11.3B
2014 — $11.6B
Why anybody would insist on paying more than 20x earnings for a company with zero earnings growth whatsoever is beyond me. And remember, P&G is passing on price increases and is just maintaining earnings.
So I went on the Twitter and asked y’all a simple poll question. Do you buy name brand laundry soap (Tide, Gain, Sunlight, etc.) or the cheap generic stuff? I was thinking that if anyone was going to buy generic, it would be a bunch of personal finance fanatics, but it just wasn’t the case. Brand names crushed the generic counterpart by a count of 5-1, with one person responding that he made his own, via a recipe provided by everyone’s hoarder of nickels, The Simple Dollar.
Plz help everyone. Thanks. RT @thesimpledollar Missing: 3 nickels. If found, return to T. Hamm, Iowa.
— Nelson! (@financialuproar) June 4, 2015
Ah, The Simple Dollar, my favorite purveyor of obviousness. Instead of linking to the multiple instances on here where I made fun of it, allow me to link to the corpse of Control Your Cash which did a pretty masterful job of making fun of Trent’s experiment of making his own toothpaste.
Anyhoo, back a few years ago, Trent decided he was going to stick it to Big Laundry and make his own laundry detergent. Let’s present a few highlights:
“I’ve been experimenting with making lots of cleaning supplies at home, but this one is by far the craziest – and the most successful. Basically, I made a giant bucket of slime that works incredibly well as laundry detergent at a cost of about three cents a load. For comparison’s sake, a jumbo container of Tide at Amazon.com costs $28.99 for 96 loads, or a cost of $0.30 a load. Thus, with each load of this stuff, I’m saving more than a quarter.”
Right from the beginning I can see a couple of problems. Firstly, he’s comparing the price of his goo with the price of Tide, the Cadillac of laundry soaps. Saving 90% is admirable, but it’s kind of a useless comparison. I found Gain and Sunlight for about a dime per load with a very small amount of effort.
And secondly, I have a really easy way to make your Tide last a whole lot longer, especially if you’re a white collar worker like most people reading this. You don’t need to use a whole cup on clothes that are just slightly dirty. I cut my usage in half years ago, and just pre-treat anything with assorted protein stains. It works just as well.
I meant when I drop my steak on my shirt, preverts.
Let’s first compare Trent’s goo to my Dollarama detergent in the above picture. For a cost of 3 cents per load, Trent was able to make himself a nice (although he might be biased) load of laundry soap. For $2 (plus tax), I was able to get myself laundry detergent that costs 6.67 cents per load that took absolutely no work to make, store, or clean up afterwards.
As far as I’m concerned, all of that is not worth 3.6 cents per load, already making my dollar store find the big winner. Besides, I can pretty easily stretch that bottle into 40-50 loads, getting the cost down to under a nickel per load.
But let’s look back at Trent’s recipe. Just how much work is involved?
Step One: Put about four cups of water into a pan on your stove and turn the heat up on high until it’s almost boiling. While you’re waiting, whip out a knife and start shaving strips off of the bar of soap into the water, whittling it down. Keep the heat below a boil and keep shaving the soap. Eventually, you’ll shave up the whole bar, then stir the hot water until the soap is dissolved and you have some highly soapy water.
There’s a step two in there, but screw it. Let’s assume a half an hour for everything to be slightly generous, even though I think it would be closer to an hour. Now let’s value our maker’s time at a very conservative $10 per hour, meaning an extra $5.
Suddenly, the cost per unit rises nearly 50%, to 4.4 cents per use. That’s still cheaper than buying the cheap stuff for 6.7 cents per use, but suddenly there’s a very convincing financial argument to be made in favor of just buying the damn stuff and paying slightly more.
There’s also the ability to buy laundry soap on sale at the ol’ Walmart, Superstore, or whatever other store suits your fancy. I was pretty easily able to find brand name soap on Walmart’s website for less than a dime per load, is just a little more than the Dollarama special I buy. Generic stuff from Walmart worked out to about eight cents per load.
And this wasn’t even finding a great sale. If you’re patient, I guarantee you can do better than six cents per load. Probably not a whole lot better, but still.
Let’s wrap this up. Is it worth it to make your own laundry detergent? Only if you value your time at basically nothing. If you’re like the rest of us and would rather not make your own, just keep your eyes open for deals or pick up the cheap stuff at Dollarama.