Buy One Get One Margin

Free Buy One Get One Margin calculator with clear step-by-step results.

About Buy One Get One Margin

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.

Formulas

Promotional margin

Margin % = (price - cost x (1 + redemption rate)) / price x 100

Profit index

Index = promo profit x (1 + sales lift) / normal profit

Worked example

With the default values below, Buy One Get One Margin returns Margin during the promotion of 38.80%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Regular unit priceminimum 0.01 $: 25 $
Unit costminimum 0 $: 9 $
Share of buyers who claim the free itemaccepts 0–100 %: 70 %
Sales lift from the promotionaccepts 0–300 %: 30 %

Results

Margin during the promotion: 38.80% %
Gross profit per transaction: $9.70
Cost of goods per transaction: $15.30
Total profit vs running no promo: 0.788 x

Step by step

1Values used
2Promotional margin
3Profit index
4Margin during the promotion= 38.80 %
5Gross profit per transaction= $9.70
6Cost of goods per transaction= $15.30
7Total profit vs running no promo= 0.788 x

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or compounding frequency into account.
Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Why does redemption rate matter so much?

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.

What does an index below 1.0 mean?

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.