Why BOGO is Typically A No-No

bogo

Let’s take a peek into BOGO: “Buy One Get One” offers.

Shoe stores are great at this. A couple of “Famous”-type chains tend to have a seasonal BOGO sale. Lately I have seen this a lot, perhaps due to economic times. Buy One, Get One… Half Off, or maybe even a Buy One, Get One Free.  What a deal! Or is it?

Well, it largely depends on if you need two pair of shoes, but we’ll get to that later. In the mean time, you need to realize the main theme going on here: confusion.

The retailer is trying to confuse you by blurring the lines with creative phrasing. BOGO sounds an awful lot like “50% off” the entire order, doesn’t it? But it’s not. In the case of BOGO Half-Off it’s actually 25% off. Why? A quality pair of running shoes will start around $80 these days. Running the numbers on BOGO (1/2 off), two pair of these running shoes will cost $120 ($80 + $40), and $120 divided by the full price of $160 is 75% (25% off).

Ok, so you’re not surprised by this. Good, because retailers rely on it being tough for most to jump directly from A to Z without sitting down to think things through. And that’s the whole point – a 25% discount is obviously not as good of a deal as 50% off – if you miss that fact, you get a little poorer and they get a bit richer.

Unfortunately, though, there is even more dirt underneath BOGO. This is where the retailer gets a bit tricky. Your “BOGO” discount comes off of the *lower-priced item*. Let’s run a some examples:

Example 1: 2 pair of running shoes ($80 each)

  BOGO 1/2 Off BOGO Free
First Pair $80 $80
Second Pair $40 $0
Deal Price $120 $80
Regular Price $160 $160
Savings 25% 50%

So far, so good – exactly what we expected. Nothing has slipped past us yet.

Example 2: One pair of running shoes ($80), one pair of walking shoes ($40)

  BOGO 1/2 Off BOGO Free
First Pair $80 $80
Second Pair $20 $0
Deal Price $100 $80
Regular Price $120 $120
Savings 20% 33%

Great job – you caught that one too! If your second pair/item is of less value than the first, you get LESS of a discount. Ouch.

So there you have it: BOGO means the most to you when you buy TWO pair of exactly the same value (or that are exactly the same), and you get the best mileage when you have access to a “pure” buy one, get one free.

Going back to the initial thought, though: do you really need to go home with two new pair of shoes (or any other item for that matter)?  Here are some ideas of when BOGO makes the most sense:

  • Do you already know that the item will wear well or you will get tons of use out of it? Have you owned the *same* item in the past and thought “boy I should get these again?” Examples: standard dress shoes, running or cross-training shoes (especially if you have stopped growing and the shoes are being discontinued), a great brand of shirt that fits well.
  • Do you have more than one kid of the same gender? If yes, the younger kid will grow into the second item eventually (or the twin will get to wear them right away). If no, and in this case for shoes, don’t do it because the kid you bought them for will outgrow the second pair before they get to wear them.
  • Are you buying shoes for your bridesmaids? Hopefully you don’t have an odd number of people in the wedding party…
  • Restaurants. BOGO is actually a GREAT deal at a restaurant. This can really decrease the cost of taking a friend out to lunch, a date (careful here, you don’t want to look cheap), or having a fun night out with the family. Just watch the fine print, as many of these seem to come with a minimum purchase amount and/or exclude tax, beverages, etc.

So what do you think? Do you have more examples of when BOGO makes sense? Tell us about them by commenting on this post!

Talk Soon,

– Nathan

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2 Responses to “Why BOGO is Typically A No-No”

  1. Kendra says:

    I enjoyed your article – excellent work!

  2. Dan says:

    Really cool post…I was searching for something like this. thanks…