BOGO Offers Explained: The Main Types and the Margin Maths

Buy one get one free, buy one get one half price and buy two get one free are three different discounts, even though all are called BOGO. Across the units the customer takes home, the first is half off, the second is a quarter off and the third is a third off. This guide sets out the types, the margin on each with a worked example, when a BOGO is a better choice than a plain percentage, and the limits that stop the offer costing more than planned.

What are the main types of BOGO offer?

They all follow one pattern: buy a quantity of X, get a quantity of Y reduced or free.

• Buy one, get one free. Two units for the price of one.
• Buy one, get one at a percentage off. The second unit is reduced, commonly by half.
• Buy two, get one free. Three units for the price of two.
• Buy X, get a different Y. The reward is another product, free or reduced. This is the version used to introduce something new.
• Gift with purchase. Spend or buy a certain amount and a gift is added. It is a close relative and is compared with money off in free gift or percentage discount.

Why are they not the same discount?

Because the discount is spread across every unit in the deal, not just the one labelled as reduced. Divide what the customer pays by what the same units would cost at full price.

• Buy one, get one free: pays for one of two units. A 50 percent discount on the pair.
• Buy one, get one half price: pays for one and a half of two units. A 25 percent discount on the pair.
• Buy two, get one free: pays for two of three units. A discount of one third on the set.

Work out the effective percentage for any BOGO before you compare it with your other offers.

What does each type do to margin?

Say a store sells a candle for $20. As example figures, each candle costs $6 to make, and packing and shipping cost $5 per parcel for up to three candles.

• One candle at full price: revenue $20, costs $11, profit $9.
• Buy one, get one free: revenue $20, costs $17, profit $3.
• Buy one, get one half price: revenue $30, costs $17, profit $13.
• Buy two, get one free: revenue $40, costs $23, profit $17.

In this example, buy one get one free still makes a profit, but a third of what a single full-price sale makes, so it only pays if it brings orders you would not otherwise have had. The other two earn more than a single sale, because the extra revenue is larger than the cost of the extra units.

Run the same sum with your own costs. On a product where the unit cost is more than half the price, buy one get one free loses money on every order.

When does a BOGO beat a percentage discount?

When you want more units to leave per order, and when you would prefer not to show a lower price on the product itself.

Compare with the candle above at 50 percent off: one candle sells for $10 against $11 of costs, a loss of $1. The same 50 percent delivered as buy one get one free makes $3, because the customer had to take two units and the parcel cost was shared. A BOGO has a minimum quantity built in; a percentage does not.

A BOGO is the better tool when:

• You are clearing stock. Every order moves at least two units. There is more in using bundles to clear slow-moving stock.
• You are introducing a second product. Buy X, get Y puts Y in the hands of people who already trust X.
• You want to protect the price. The single unit stays at its normal price on the page.

A percentage is the better tool when the customer only needs one. A second identical kettle is worth nothing to most buyers, so a BOGO on it reads as no offer at all.

What stock and abuse limits should you set?

Set them before launch, because a BOGO consumes stock at twice the rate of orders or more.

• Reserve the stock. Count units, not orders. If you can spare 300 units for a buy one get one free, the offer ends at 150 orders.
• Limit uses per order. Decide whether the deal applies once or to every qualifying pair in the cart. Unlimited pairs invite resellers to empty the shelf.
• Set an end date and an end condition for when the reward item sells out.
• Define 'equal or lesser value' if X and Y can be different items, so the free item is never the dearest one in the cart.
• Decide what it combines with. A BOGO that also accepts a sitewide code is a deeper discount than the one you costed.
• Write the returns rule. State what happens to the free item when the paid one comes back. Our guide to returns and refunds on bundles covers the options.

Be straightforward with the word 'free'. Do not raise the price of the paid item to fund the reward, and check the advertising rules for the markets you sell in.

How should the offer reach checkout?

Automatically, with the reward priced correctly once the qualifying items are in the cart. A BOGO that depends on a code fails whenever the shopper forgets it, and you hear about it afterwards as a support request. Marka Bundles & Upsells includes buy-X-get-Y and gift-with-purchase offers and applies them at checkout through Shopify Functions, with no code.

A short checklist

1. Convert the offer to its effective percentage across all units.
2. Calculate profit per order with your own unit and parcel costs.
3. Confirm the reward suits the product: a second unit must be useful.
4. Reserve stock in units and set an end date.
5. Limit how many times the deal applies per order.
6. Decide which other discounts it may combine with.
7. Test at, below and above the qualifying quantity.

BOGO is one of five bundle formats covered in our guide to Shopify bundles, and the right one depends on how your customers already buy. When the sum works, Marka Bundles & Upsells can run the offer without a discount code.