In plain words
Buy one, get one free gives the customer a second unit at no charge. It is among the strongest offers a brand can show, because free reads as more generous than half off.
In money it is the same as 50% off two units. The customer pays for one and you ship two, with both product costs and an extra pick. Whether it works depends almost entirely on how much the product costs relative to its price.
Formula
- BOGO margin = price of one unit − cost of two units − one order's fulfilment and fees
Worked example
Buy one $40.00 bag, get one free. The customer pays $40.00 and the order carries $24.00 of product. The engine puts its margin at $3.16, or 7.9%, against $15.36 for the bag sold alone.
To earn the same per visitor, the offer would need 386.1% more buyers.
The example order
A $40.00 bag of coffee, shipped free, every cost counted
2 declared kinds cost nothing on this option
| Step | Grain | Amount |
|---|---|---|
| Revenue | – | $40.00 |
| Cost of goods | per unit | −$12.00 |
| Pick and pack | per order | −$1.18 |
| Packaging | per parcel | −$0.50 |
| Shipping label | per parcel | −$7.50 |
| Card fee per order | per order | −$0.30 |
| Refunds | percent | −$2.00 |
| Card processing | percent | −$1.16 |
| Contribution margin | – | $15.36 |
| 2 kinds costing nothing | – | $0.00 |
Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost.
BOGO is not two sales
It is one order with one payment. Counting the free unit as a second sale at full price doubles revenue that never existed. The free unit is a cost of the order, like a gift.
Using it
Keep it for products with a very low unit cost against their price, for clearing stock that would otherwise be written off, or for a first purchase you expect to lead to many more. On a product with ordinary margins it turns a profitable order into a near break-even one, so run the numbers before the banner goes up.