How much money do companies lose on "buy one get one free" promotions?


Quick Answer

Companies usually don't lose money on "buy one, get one free" promotions because they adjust the price of items accordingly when the items are part of the promotion. Companies use these promotions to boost their sales and attract new customers, so they actually make money on them.

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Full Answer

"Buy one, get one free" is an effective marketing tactic because it encourages customers to get two items, even if they don't need both, to take advantage of the deal. Another marketing strategy that provides the same discount is 50 percent off. However, "buy one, get one free" promotions tend to be more profitable for companies, because they profit on two items instead of one, as long as the items in the promotion are priced properly. Certain countries require stores to keep an item at full price for a set period of time before using it in these promotions.

Other common marketing strategies include "buy one, get one half off," "buy three for the price of two" and "buy two, get one half off." Supermarkets that use these types of promotions have received criticism for contributing to obesity and wasting food, because these promotions are often for unhealthy items or items that don't last long. Customers then either don't eat all the items and must throw some away, or overeat because they have extra.

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