Quantity Discounts vs BOGO: Which Drives More Revenue?

'Buy One Get One Free' is the most famous promotion in retail. It also frequently destroys margin without lifting net revenue. For most single-product stores, tiered quantity discounts (Buy 2 save 10%, Buy 3 save 20%) outperform BOGO on both AOV and gross profit.

The math

Assume a ₹1000 product with 60% margin (₹400 cost, ₹600 gross profit).

BOGO 'Buy 1 Get 1 Free'

• Revenue: ₹1000
• Cost: ₹800 (you're shipping two units)
• Gross profit: ₹200
• Customer perceives a 50% saving

Tiered 'Buy 2, save 20%'

• Revenue: ₹1600
• Cost: ₹800
• Gross profit: ₹800
• Customer perceives a 20% saving

Same number of units shipped, same customer cost. Quantity discount makes 4× the profit. The customer 'felt' a smaller discount but bought the same volume.

When BOGO actually wins

BOGO outperforms tiered discounts in a few specific cases:

• Inventory you must clear (seasonal, expiring) — the 'free' unit is salvage value.
• Acquiring a new buyer in a category they've never tried (the 'free' unit pays for trial).
• Gifting season — buyers want one to keep, one to give, and 'free' simplifies the decision.

How to set up tiers

Three tiers is the sweet spot. More than that and the buyer skims past.

1. Tier 1 — Buy 2, save 10%
2. Tier 2 — Buy 3, save 20%
3. Tier 3 — Buy 5, save 30%

Show the buyer the tier they're currently qualifying for, and the next tier they could unlock. The phrase 'Add 1 more to save 20%' converts better than any discount badge.

What about percentage discounts?

Flat percent-off (10% off everything) is the worst promotion for single-product stores. You're discounting buyers who would have paid full price, with no behavioural lift. Quantity tiers only reward buyers who increase order size — every margin point you give up earns you AOV in return.