You might have received price quotes from different industries where price is expressed in $/M, and you may be wondering, what's M? What's the unit of measure here? Why it is done this way? And why do they use the uppercase letter M?
What is M and what does it mean?
In short, M means 1,000 (one thousand). So when you read a price quote in $100/M, it means $100 per 1,000 units. If it is $152.35/M, it means $152.35 per 1,000 units. You may ask, why bother pricing per one thousand? Wouldn't it be simpler just to have per unit pricing ($/ea.)?
While this may very well be the better option for a larger item costing more per unit (it wouldn't make much sense to quote a car per thousand ($15,000,000,000/M) since the price is so large per unit, it is better to quote in $/M when you are dealing with smaller case per unit and when items are not often sold in single units. You will find this quoting method common in printing and the online media industry. For example, paper mills often quote in this unit to help compare apple to apple ($26.15/M for 50 lbs. paper vs. $30.22/M for 70 lbs. paper). This unit is also common in the online media industry where banner advertising or email marketing is sold at CPM (cost per thousand impressions).
Likewise in the packaging industry, where bottles or closures are often sold at tens of thousands, and different manufacturers having different carton and pallet counts (number of bottles or closures packed in a carton and on a pallet), it will be more sensible to quote per thousand units. Hence this quoting mechanism is used. For example, let's say you are responsible for obtaining a quote for a 1oz Amber Boston Round Glass Bottle, and your product line has an annual usage of 250,000 units and initial release quantity of 50,000 units.
You may see a price quote for 50,000 1oz Amber Boston Round Glass Bottles at $352.51/M, which means $352.51 for one thousand bottles, if the price quote was given in each ($/ea.), you will then see $0.35251/ea., which seems silly given the number of decimal points in this currency format. It also makes for a harder comparison when you then receive an alternative quote of the same bottle, from a different manufacturer, at $351.12/M, or $0.35112/ea. If you begin making comparisons on price and the rounded down decimal to reflect proper currency, the two prices at each ($0.35251/ea. and $0.35112/ea.) will become ($0.35/ea. and $0.35/ea.), making the two quotes the same. Now compare the two quotes at $/M : ($352.51/M and $351.12/M), that's a difference of $1.39/M. While $1.39 doesn't seem like much, multiplying that by the total units you are buying annually (250,000), you will begin to see why such as small difference in $/M begins to make an impact in your overall supply chain.
This is not to say that every item in the packaging industry quotes units per thousand, and for a smaller quantity (carton) or larger items (gallon drums, plastic pails, etc.) it is better to quote $/ea. as they are being sold individually.
Ok, I can understand that. But where did the M come from?
M means thousand in Roman Numerals, and it is always in uppercase. While we are unable to track down the origin of why M was used originally, it has been widely adopted for decades (if not centuries). But for some fun facts, let's look at a roman numerals chart we've found in several different sources:
Remember seeing Roman Numerals in school?
- I is 1
- V is 5
- X is 10
- L is 50
- C is 100
- D is 500
- M is 1,000
And the ordering of these letters to express every number in between will make your head spin
- IV is 4 but VI is 6
- XVIII is 18 (X is 10 V is 5 and III is 3, the III goes after V makes it 8 [VIII], and that going after X adds to it to become 18)
- MMXV is 2015 (two Ms makes it 2,000, X is 10 and V is 5, and you can put them all together to make it 2015)
Since we are not roman numerals experts, it is best to leave it to the experts to help you understand how roman numerals work, just in case you come across this article while studying for your roman numeral exam:
If you are still unsure about reading Roman Numerals, numbers are formed by combining symbols and adding the values. In this alphabet there is no zero, symbols are placed from left to right in order of the value that they represent. There are a few exceptions to the rule, but other than that the rules are fairly simple.
The letter M has indicated 1000 since Roman Numerals were introduced, which if you didn’t know, has been around for quite some time (around 4th century BC.) Since then, many different units of measure have been introduced that stand for 1000. In metric measurements, M designates the prefix for mega, or million. M also designates milli – or one thousandth so mm is a millimeter or .001.
Why not K for thousand since many associate M with million?
K comes from the Greek word kilo, which also stands for 1,000. More recently a newer method of measurement has been used to reflect the metric system’s use of K for thousand and M for million. While this unit of measurement is also common, many pricing quotes in industries mentioned at the beginning of this article stuck with M for consistency. So next time when you see a price quote with this on it... $/M, you know it is price per thousand units. Remember, however, that when you are ready to make a decision on purchasing in the packaging industry, make sure you consult with your distributor on pallet count and truck load quantity to ensure that you maximize your logistics and reduce surprises, but that topic is probably worthwhile to explore in another Quick Question Monday article.