Why "Buy One Get One Free" Is Usually A Bad Deal

by Xin Lu on 9 June 2008 26 comments

Recently, I read about a promotion from a home builder in San Diego where consumers could buy a 4000 square foot house for $1.6 million and get a smaller home by the developer valued at $400 thousand for free. This sounds like a fantastic deal, but I am always wary of any promotion labeled with "buy one get one free", and here is why.

Oftentimes, "buy one get one free" ends up being "buy two at the regular price". For example, I often see "buy one get one free" ads for orange juice at the supermarket, but the first box always costs over $5.00. At the same time the juices not in the promotion are selling for $2.50 to $2.99 a box. So basically, the markets have priced the free item into the price of the first item. In some stores they do cut the price in half when you just buy one, but in most supermarkets I have gone to if you did not grab the second box of juice you would be overcharged for the first box.

Another problem with buy one get one free is that often times you do not need the second item. Suppose that I only consume one gallon of milk every two weeks. If I were tempted into buying a second gallon in a buy one get one free promotion, then the second gallon would go bad before I have time to consume it. That creates waste instead of savings. In the case of getting a second home for free, the buyer has to pay property taxes on the second home and maintain it, and those things certainly are not free. Basically, if there is no need for the second item, there is no point in buying it even if it were "free".

In the case of the San Diego developer, so far they have received one offer on their expensive luxury mansions, but the buyer does not want the cheaper house for free. Instead, he wants the value of the smaller home deducted off his purchase price so if the developer agrees he could purchase the larger home for $1.2 million. I think this guy is quite wise because instead of being liable for poperty taxes on two homes valued at $2 million, he will only have to pay taxes on one property he purchased for $1.2 million. He saw right through the marketing of "Buy One Get One Free", and I think he will really be getting a deal.

Ultimately, it is up to you to see how much you need and how much you are willing to spend. Being aware of the regular price of things also helps you in determining whether a buy one get one free promotion is truly a great deal. Do not be suckered in by the word "FREE"!

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Guest's picture
Guest

I make my hubby nuts at the store, because when I see B1G1, I look at is at getting two at half the posted price. I say a B1 at $5.00 and get 1 Free means I can buy two at 2.50 each. If I am not willing to pay $2.50 for one, I sure don't want to pay it for 2! He is the biggest sucker for the word FREE. I was too at one time, but then once I started looking at it differently, I don't jump so fast.

Shelle

Guest's picture
FrugalZen

It all depends on what your buying and also on Knowing the prices at other stores.

The local Publix Grocery usually puts a lot of things on BOGO and they rotate through about a 12 week cycle..my grandfather owned a grocery store and this is standard..everything usually goes on sale at least once every 12 weeks.

I stock up on 12 weeks worth but ONLY if the individual price is now lower than the generic discount brand AND if it is something I use.

Usually I have plenty of Del Monte vegetables that on BOGO cost less per can than Wal-Marts house brand.

And if you don't like Del-Monte next week it might be Green Giant on BOGO then next week Libbys.

Amy Dac..(sorry can't spell it) also known as "The Frugal Zealot" and her idea for a "Price Book" is a vast help keeping track of things.

~ Roland

Guest's picture
Jake

Thanks for the info on grocery stores, FrugalZen. I often take advantage of the B 1 G 1 Free at Publix - good to know I'm not getting ripped off!

Guest's picture
marisa

In many grocery stores, you can get the b1g1 free deal even if you only buy ONE of a given item. It is quite awesome - provided you know it's a good deal and it's something you'd buy anyway.

I just take one of whatever I need that's on b1g1, and if it doesn't ring up at half the b1g1 price, I don't buy it unless it's at least as good a deal was what I would pay without the promotion (sometimes it is... and sometimes it's not).

Guest's picture
Lisa

I don't agree with the author's grocery store comments. Most BOGO sales I come across are legit in pricing. Furthermore, being able to use 2 coupons on a BOGO deal can be very rewarding. I've had BOGO coupons which applied to BOGO deals and I've gotten both items for free - on more than one occasion.

Housing is a completely different ballgame. I can't imagine anyone ignorant enough to fall for that kind of BOGO.

Guest's picture
Carrie

BOGO is usually a better deal than any other discount at the grocery store. Why? It's 50% off. You often see items on the store shelves marked down 10%, 20% or so, but unless it's on clearance you rarely see 50%.

Also, sometimes there are BOGO manufacturer's coupons. If you combine a BOGO coupon with a BOGO sale, most stores will give you the two items for free. For reals!

Xin Lu's picture
Xin Lu

Well, the thing is it's only 50% off if the price stays the same as the usual price.  This does happen, but a lot of the times as I have mentioned in the article they double the original price so you're not getting a discount.  Yes, with manufacturer's coupons it's always a good deal because you are taking the discount on the normal price.  Also, if the store does legitimately discount the product even if you buy one thing, then yes, it is a good deal.  However, as we all have mentioned already, it pays to know what a "good" and "cheap" price is for each item. 

Guest's picture
Guest

You're right - the key really is in being aware of what a "good" price for each item is. The stores (and now apparently housing developers) are counting on consumers being uninformed and carried away by the thrill of getting an item on SALE. I often look at the BOGO or the 10 for $10 deals, and walk right by because on another day these same items would be on sale for much less.

Guest's picture
Peter Jeziorek

There is a Chinese saying that says "The sheep's hair grows on the sheep's back." It essentially means that when a seller tries to give you promotional gifts, or buy one get one free, they are actually just folding in their profits into the joint sale. They're trying to fake us into believing that the value is higher than it really is.

Chinese culture already instills these little wisebread-ish tidbits of information into their culture. I hope one day Americans will have more sayings that promote frugality.

Guest's picture

the important place to look is the price per unit (either per item, per pound, ounce, gallon, etc). the stores I go to break this down and I see where the real deals are, but if your store doesn't, please invest some time to learning simple math. B1G1 may not be the best, but it's not worth ignoring outright.

Xin Lu's picture
Xin Lu

Hey Peter, I know that proverb!  To explain it further, it compares the money consumers spend to the wool, and the consumers are the sheep.  So basically it means as you said, the markets and promoters ultimately get their profit from the consumers even though they make us think they are giving us a good deal. 

Guest's picture

They trick us with these sales....I now know what to avoid.

Thanks

Guest's picture
Amy

I'm not a huge BOGO shopper partly because I live by myself and partly because I'm fickle. I don't trust myself to use up 2 of the same item before they go bad, and even if they don't go bad, sometimes I just get bored and it goes to waste.

Most of the BOGO's I've seen around here are good deals though... no huge markups are put on the items before the deal is made.

Guest's picture
Jaime

I think Buy One, Get One deals at the supermarket are great if (and only if) you can guarantee there will be no waste.

Food Lion often has Buy One, Get One deals on items like big bags of chicken tenderloins, canned goods, and frozen veggies. I think BOGO deals on anything that you can stow away or freeze for later usage that you KNOW you'll need is a good buy.

I live alone, and it's tough cooking for one person without creating a lot of waste. So I love stocking up on things that can be frozen or re-sealed and rationed out later.

Guest's picture
AndyS

Having worked in retail a number of times the BOGO is for close to expiry items that the store wants to get rid off. So while the BOGO deal may be cost effective, if the item is perishable you may not have time (for health reasons) to consume the second "free" item.

Guest's picture
Kelja

There is nothing evil about making a profit. Those that keep their eyes open don't get ripped off.

It's rather simple: Buyer Beware.

If you're fooled by ancient marketing gimmicks, you did fall off that turnip truck.

Guest's picture
Morgan

Hummm........it should be said their is nothing evil about making a "honest" profit. Not trying to rip someone off and kick them to the curb. That is the bad side of Capitalism and why our country is in the sad state its in. Greed!

Guest's picture
Stephen

Ah yes, CVS got me on this one recently. Buy 1 get 1 free for toothpaste. Coulda been a sweet deal but they charged me full price for both toothpastes, so I spent $6 instead of the 3 i was hoping for.

Guest's picture
KMFPL

When I used to change prices for Kroger, I'd often notice this pattern: One week, we'd get a sticker raising a price (like from 2.29 to 2.79). The next week, that item would go B1G1F. After that sale ended, it would go back to the original price. It's still a decent savings, but it wasn't really B1G1F.

At my current employer, we do real B1G1F, without playing with the base selling price.

But it just goes back to what others have said: pay attention to unit pricing and whether it's a good deal on an item you would use anyway.

One last thing: FWIW, these deals almost always come from the manufacturer of the product, not the retailer. The retailer gets a deal on purchasing the product, or a rebate on units sold, in exchange for providing the deal. If the deal is successful, both the retailer and the manufacturer win long-term with increased sales.

Guest's picture
Cindy M

if you know how to work it and you really can use the item and it's a true deal. The 2-for-1 milk, for instance. If I'm out shopping anyway and see things I know my niece, mom or sister would definitely use, I'll grab it and make them split the cost with me. You both make out a bit that way. I've always thought that 2 sharp housewives, etc., working together could save quite a bit in so many ways and not just at the grocery.

Guest's picture
Gina

Some stores (like CVS, Rite Aid, etc.) will allow two coupons, one per item even though the second one rings up as $0.00. My local grocery store won't take that second coupon, and I've noticed they raise the "sale" price when a product goes BOGO. At the drugstores, however, I can reduce the out-of-pocket price dramatically by using two coupons on the one price.

And for the commenter above who paid double at CVS--when that happens, you need to say something right away at the register. Just have them void the transaction and go back and find the correct item. Sometimes they haven't put the tags on the shelf to make it easier to identify which size/variety is BOGO.

Guest's picture
Andrea

I agree that the example with the homes is a ripoff, but BOGO can work at saving you money at grocery stores. Like others have mentioned you have to be a very good shopper. You have to know what is a good deal AND only concentrate on items you regularly buy AND can use safely before the expiration date.

I regularly stock up on BOGO deals at Publix, but again only if we usually buy the products anyway. For example, we use so much pasta, sauce, and olive oil, that those are some of the items we specifically stock up on if they are the right price and/or product we usually buy. It's worked out tremendously for us!

Guest's picture
Grace

For non-perishable items that one uses regularly, BOGO is definitely a bargain. Houses? Maybe not so much. But BOGO works for your milk example, too. Milk freezes just fine (though it takes a full day to thaw out!). Freezing it means those "use by" dates will make you crazy, but a black Sharpie takes care of that.

Guest's picture
BROOKLYNBORN.....NY

The seller's aim is to move products.Items sitting on the shelves are tying up money and space. Seller buys in volume so his buying price is lower. He sells in volume he makes more, although mark-up on each item is less. Finally the consumer pays less(comparatively)......everybody wins. If u r naive enough to believe BOGO on real estate, i'll sell u the air u breathe.

Guest's picture
OneAdvice

This article was really informative, i guess that the word FREE doesn't always mean FREE! I am so suckered in by that work though, even more than the word Sale.

Nice to know that i shouldn't splash out everything i *think* I am getting a good deal. Thanks for the post!

Guest's picture
Bad BOGO

I recently learned how a major department store does their BOGO in the shoe dept. I bought two pairs of shoes the night before the BOGO, the next morning I went back to return the shoe to repurchase them through the BOGO sale. I paid $34.99 on the first pair and $32.99 on the other, total $68.98. When I went to the shoe dept. the clerk was frantically changing prices, I noticed the shoes I had purchased were still at the price I had paid the night before. I asked her if the BOGO was for all shoes, she said yes. When I said that was a great deal, because I had just bought the shoes the night before on sale. She asked me which shoes, when I showed her, she said "Oh wait, I haven't changed the price on those yet!". She changed the $34.99 To $80 and the $32.99 to $70. I asked her why she raised the price, she smiled excitedly and said, "Because it's our BOGO sale. Meaning I would have paid $80 vs $68.98.