What Is BOGO (Buy One, Get One)? Margin Math

BOGO Free, BOGO 50% Off and Buy 2 Get 1

Three versions are common. Here’s what each really takes off:

Buy one, get one free. Two items for the price of one. That’s 50% off each item.
Buy one, get one 50% off. The second item is half price, so 25% off across both.
Buy two, get one free. Three for the price of two, or about 33% off each.

Stores use BOGO to sell more units per order and clear stock. Shoppers get “free” right away. “25% off two items” takes a bit of math.

What BOGO Really Costs: A T-Shirt Example

Say your T-shirt sells for $25 and costs you $10. Here’s one order under each deal.

One order	Full price, 1 tee	BOGO free, 2 tees	BOGO 50% off, 2 tees
Shopper pays	$25	$25	$37.50
Your product cost	$10	$20	$20
Gross profit	$15	$5	$17.50

If this shopper would have bought one tee anyway, BOGO free drops your profit from $15 to $5. You’d need two extra BOGO orders just to earn back that $10.

BOGO 50% off looks better, since $17.50 beats $15. But if the shopper was going to buy two at full price anyway, that’s $30 profit. The deal cost you $12.50.

These numbers leave out shipping, packing and payment fees. Add those too.

When BOGO Hurts Your Margin

Your cost is more than half the price. Then BOGO free loses money on every order. A $25 item that costs you $14? Two cost $28, so you’re $3 short.
People only need one. Few shoppers want two of the same mattress or novel, so the deal won’t pull.
The discount lands on sure sales. Some BOGO orders come from dedicated buyers who’d pay full price. For them, the free item is pure cost.
Next month’s order comes early. With coffee, vitamins or pet food, a shopper who stocks up now may not reorder for a while. Sales jump, then dip.
It’s always on. Shoppers learn to wait for it, and that’s how discount fatigue sets in.

Torn between BOGO and a plain percentage off? We compare them in BOGO vs. percentage discounts.

How BOGO Works in Shopify

In the Shopify admin, BOGO uses the Buy X get Y discount type. You set what the shopper must buy (a number of items or a spend amount) and what they get, free or at a discount. It can run as a code or apply on its own as an automatic discount.

One catch: the deal only kicks in once the “get” item is in the cart. Shopify won’t add it for them, so say it plainly on your product page.

In sales reports, the free item’s full price counts in gross sales, and the same amount shows up under discounts. So judge a BOGO week by net sales and profit.

Our Shopify Buy X Get Y and BOGO guide has the setup steps, plus more deal versions and common mistakes. Prefer an app? Look at the best Shopify discount apps.

Myth: BOGO Costs Less Than a Half-Price Sale

BOGO free feels safer than 50% off, since one item still sells at full price. The tee numbers say otherwise. Half off one tee: you take $12.50, pay $10 and keep $2.50. That’s 20% of the sale. BOGO free: you take $25, pay $20 and keep $5. Same 20% margin, just spread over twice the stock.

BOGO also isn’t a gift with purchase, where the free item is something different, like a sample. Nor is it a product bundle, where set items sell together at one price.

Related Discount Terms

Discounts in general: the wider idea BOGO belongs to.
Gross Margin: how much of each sale is left after product cost.
Cost of Goods Sold (COGS): what the free item really costs you.
Average Order Value (AOV): BOGO free doesn’t raise it if the shopper would have bought one anyway.
Discount Stacking: what happens when BOGO meets another discount on one order.