BOGO Margin Calculator: Is Your Promotion Profitable?
Calculate your actual BOGO profit before you launch. Enter your product price and cost, see exactly what happens to your margins—and get warned if you're about to lose money.
Muhammed Tüfekyapan
Key Takeaways
- 1 Buy 1 Get 1 Free = 50% off per unit—the 'free' product costs you, not the customer
- 2 Below 50% margin, B1G1 loses money on every sale. Below 33% margin, B2G1 loses money
- 3 Use this BOGO profit calculator BEFORE launching—not after you've already lost margin
- 4 BOGO moves more units but at lower profit per unit. Know your goal: volume or profit?
- 5 Dedicated buyers using BOGO would have paid full price. That's hidden margin loss
- 6 Consider alternatives: tiered discounts and intent-based offers protect margins better
Buy One Get One Free. Sounds great to customers. But what does it actually do to your profit?
Here's what most merchants don't realize: that "free" item isn't free to you. You still pay for it. And if your margins aren't healthy enough, BOGO promotions can actually lose you money on every single sale.
This BOGO margin calculator shows you exactly what happens when you run a Buy X Get Y promotion. Enter your numbers. See the truth. Then decide if it's worth it.
What This Calculator Shows You:
- Your actual profit per BOGO transaction
- How BOGO compares to full price and percentage discounts
- Warning if you're about to lose money
- Break-even analysis: how many BOGO sales to match one full-price sale
BOGO Margin Calculator
Find out if your buy one get one free promotion is actually profitable
Your regular selling price
Your cost per unit (COGS)
Common BOGO structures
Your BOGO Profit Per Transaction
$12.00
Profitable, but significantly less than full price
Customer Gets
2 units
Customer Pays
$60.00
Your Total Cost
$48.00
Your Profit
$12.00
Profit Per Unit
$6.00
| Scenario | Revenue | Your Cost | Profit | Units |
|---|---|---|---|---|
| Full Price (1 unit) | $60.00 | $24.00 | $36.00 | 1 |
| BOGO (2 units) | $60.00 | $48.00 | $12.00 | 2 |
| 50% Off (1 unit) | $30.00 | $24.00 | $6.00 | 1 |
To match the profit of one full-price sale, you need:
3 BOGO transactions
Danger: You're Losing Money!
Your cost for the BOGO units exceeds what the customer pays. You lose money on every sale.
Caution: Significant Profit Reduction
Your BOGO profit is significantly lower than full price. Make sure increased volume justifies this promotion.
This BOGO Is Profitable
You're still making profit, but remember: you're giving up margin compared to full price. Use BOGO strategically.
How BOGO Profit Math Works
The BOGO profit calculator uses a simple formula. But the results often surprise merchants.
BOGO Profit Formula:
Profit = (Price × Units Paid) − (Cost × Total Units)
Where:
- • Units Paid = items customer pays for
- • Total Units = items customer receives (paid + free)
Let's walk through an example:
Product: $60 selling price, $24 cost (60% margin)
Buy 1 Get 1 Free:
- Customer pays: $60 (for 1 item)
- Customer gets: 2 items
- Your cost: $24 × 2 = $48
- Your profit: $60 − $48 = $12
Buy 2 Get 1 Free:
- Customer pays: $120 (for 2 items)
- Customer gets: 3 items
- Your cost: $24 × 3 = $72
- Your profit: $120 − $72 = $48
Key Insight:
Buy 1 Get 1 Free is effectively a 50% discount per unit. But you're moving 2 units instead of 1. Whether that's good depends on your goals AND your margin.
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BOGO Types Comparison
Different BOGO structures have different impacts on your margins. Here's how they compare:
| BOGO Type | Customer Pays | Customer Gets | Effective Discount | Min. Margin Needed |
|---|---|---|---|---|
| Buy 1 Get 1 Free | 1× Price | 2 units | 50% per unit | 50%+ |
| Buy 2 Get 1 Free | 2× Price | 3 units | 33% per unit | 33%+ |
| Buy 3 Get 1 Free | 3× Price | 4 units | 25% per unit | 25%+ |
| Buy 4 Get 1 Free | 4× Price | 5 units | 20% per unit | 20%+ |
The more items required to buy, the less you're giving away. Buy 2 Get 1 Free is safer than Buy 1 Get 1 Free. But it also requires customers to commit to buying more upfront.
When BOGO Math Makes Sense
BOGO Works When:
- Your margin is healthy (60%+) — At 60% margin, B1G1 still profits. At 40% margin, B1G1 loses money on every sale.
- You need to move inventory fast — Seasonal items, expiring products, or when storage costs exceed holding value.
- Customers naturally buy multiples — Consumables (skincare, supplements), basics (socks, t-shirts), gift-worthy items.
BOGO Doesn't Work When:
- Your margin is under 50% — B1G1 at 40% margin = guaranteed loss. Even B2G1 at low margins is risky.
- Customers only want one — Furniture, electronics, statement pieces. Forcing BOGO feels unnatural.
- You're training discount dependency — Frequent BOGO = customers wait for it. You become a "sale brand."
Buy X Get Y (BOGO): Before You Run This Campaign
BOGO excites customers—but often destroys margins. Learn when it makes sense, when it doesn't, and what alternatives might solve your problem better.
The Dedicated Buyer Problem
The BOGO profit calculator shows your profit per transaction. But it doesn't show how many of those buyers would have paid full price.
The hidden cost:
- Some customers were ready to buy at full price
- You showed them BOGO, they took it
- You gave away a free product to someone who didn't need convincing
Example: If 30% of your BOGO buyers would have bought at full price anyway, you're not just making $12 per transaction instead of $36. You're losing $24 × 30% = $7.20 per transaction to dedicated buyers who didn't need the incentive.
The Real Question:
Can you target BOGO only to hesitant visitors? Or are you broadcasting it to everyone?
A Smarter Alternative: Intent-Based Offers
What if instead of BOGO for everyone, you showed targeted offers only to visitors who need a nudge?
Growth Suite's approach:
- Tracks visitor behavior in real-time
- Identifies hesitant vs. dedicated buyers
- Shows personalized offers only to those who need them
- Dedicated buyers pay full price (margin protected)
Why this matters for BOGO: BOGO is a blunt instrument—everyone sees it. Intent-based offers are surgical. You convert hesitant visitors without giving away margin to everyone else.
Key Takeaways
Summary: BOGO Profitability
- Calculate before you launch — Use this BOGO margin calculator every time you consider a BOGO promotion.
- B1G1 = 50% off per unit — The "free" item costs you. Make sure your margins can handle it.
- Margin threshold matters — Below 50% margin, B1G1 loses money. Below 33%, B2G1 loses money.
- Units moved ≠ profit made — Moving 2 units at $12 profit isn't better than 1 unit at $36 unless you have inventory or volume goals.
- Dedicated buyers cost you extra — Some BOGO takers would have paid full price. That's hidden margin loss.
- Consider alternatives — Free Gift thresholds, tiered discounts, or intent-based offers might achieve your goal with less margin damage.
What if every discount went to the right person?
Growth Suite predicts purchase intent and shows time-limited offers only to visitors who need them.
In This Article
References & Sources
Research and data backing this article
Muhammed Tüfekyapan
Founder of Growth Suite
Muhammed Tüfekyapan is a growth marketing expert and the founder of Growth Suite, an AI-powered Shopify app trusted by over 300 stores across 40+ countries. With a career in data-driven e-commerce optimization that began in 2012, he has established himself as a leading authority in the field.
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