Free Buy One Get One Margin calculator with clear step-by-step results.
In a buy-one-get-one offer revenue stays at one unit price while cost of goods rises with every claimed free item, so margin collapses even though nothing was discounted on paper. The final index compares total promotional profit against doing nothing, using the sales lift you expect the offer to generate.
Promotional margin
Margin % = (price - cost x (1 + redemption rate)) / price x 100
Profit index
Index = promo profit x (1 + sales lift) / normal profit
Every claimed free unit adds a full unit cost with no revenue. At 100% redemption your cost of goods doubles, which is why BOGO only works on items with a high gross margin.
The promotion earns less total gross profit than not running it. You would need a larger sales lift, a lower unit cost or a lower redemption rate to break even.