Buy X Get Y + Volume Discount

Learn how to Combine Buy X Get Y and Volume Discount to boost AOV this BFCM

Offering customers great deals is one of the most effective ways to drive sales. But when you combine two strategic promotions—Buy X, Get Y and Volume Discount—you create a powerful incentive for customers to buy more while feeling they’re getting even more value. Let’s explore how these two promotions work together and why they’re so effective for boosting your sales and moving inventory.

How the Combination Works

Combining Buy X, Get Y and Volume Discount offers customers two levels of savings, making it hard to resist buying more. Here’s how each part of the promotion works:

• Buy X, Get Y: Customers receive a free or discounted product when they purchase a specific quantity of items. For example, “Buy 2, Get 1 Free” encourages customers to buy more to unlock the extra product, increasing the total number of items sold.

• Volume Discount: A discount is applied when customers purchase a larger quantity of items. For example, “Get 15% off when you buy 10 or more items.” This rewards customers for bulk buying, making it more attractive to purchase in larger quantities.

Together, these promotions work hand-in-hand to increase both the quantity and value of customer purchases. Customers are not only driven to buy more items to unlock a free product, but they are also rewarded with a discount for purchasing in bulk. This combination can be especially effective for products that are frequently bought in large quantities, such as skincare products, household goods, or clothing.

Why It’s Effective

This combination works because it addresses two key customer motivations: tangible savings and perceived value.

• Tangible Savings: The Buy X, Get Y offer provides a clear incentive for customers to buy more items to get something free. This feels like a smart financial decision, especially when combined with the Volume Discount, which reduces the overall cost of each item as customers buy in bulk.

• Perceived Value: Customers love feeling like they are getting more for less. The combination of a free item and a bulk discount amplifies this feeling. It encourages customers to increase their order size, knowing they are saving money on both the extra items they are buying and the free product they are receiving.

This combination is particularly useful for merchants who want to clear inventory, boost average order value (AOV), and enhance customer satisfaction.

How to Calculate Profit When Using These Two Campaigns

While running both a Buy X, Get Y promotion and a Volume Discount, it’s important to ensure that your promotion is still profitable. Here’s a simple way to calculate profitability:

Profit = (Revenue from Buy X, Get Y purchases − Volume Discount) − COGS of purchased items − COGS of free item

You need to consider:

• Revenue from Buy X, Get Y purchases: Multiply the total number of items sold (both paid and free) by their retail price to get your total revenue.

• Volume Discount: Subtract the value of the discount from the total revenue.

• COGS of purchased items: Calculate the cost of goods sold (COGS) for the items the customer purchased.

• COGS of the free item: Include the cost of producing or acquiring the free product offered in the Buy X, Get Y promotion.

By balancing the cost of discounts and free items with the expected increase in sales volume, you can ensure that your promotion remains profitable.\

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Example in Action: Comparing No Promotions vs. Using Promotions

Scenario 1: Without Promotion

A customer buys 4 water bottles at $10 each without any promotional offers.

• Revenue: $10 × 4 = $40

• COGS of water bottles: $4 × 4 = $16

• Total COGS: $16

• Profit: Profit = Revenue - COGS $40 - $16 = $24

• Average Order Value (AOV): The customer bought 4 items, so the AOV is: $40 ÷ 4 = $10 per item

In this case, the AOV per item is $10, and the total revenue is $40.

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Scenario 2: With Promotion (Buy 2, Get 1 Free + Volume Discount)

Now, with both a Buy 2, Get 1 Free and Volume Discount promotion, the customer buys 6 water bottles to qualify for the free product and a 10% discount for buying in bulk.

• Revenue before discount: $10 × 6 = $60

• Volume Discount (10%): $60 × 0.10 = $6

• Revenue after discount: $60 - $6 = $54

• COGS of paid water bottles: $4 × 6 = $24

• COGS of the free water bottle (Buy 2, Get 1 Free): $4 × 1 = $4

• Total COGS: $24 (paid water bottles) + $4 (free water bottle) = $28

• Profit: Profit = Revenue after Discount - Total COGS $54 - $28 = $26

• AOV per item: The customer bought 7 items (6 paid + 1 free), so the AOV per item is: $54 ÷ 7 = $7.71 per item

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Understanding the Calculation

In this example, where you combine Buy X, Get Y and Volume Discount, the Average Order Value (AOV) per transaction remains high, even though the AOV per item appears lower. Let’s break it down:

• In Scenario 1 (without the promotion), the customer buys 4 items and pays $40, making the AOV per item $10.

• In Scenario 2 (with the promotion), the customer still pays $54 but receives 7 items (6 paid + 1 free water bottle). The AOV per item becomes $7.71 because they received more items without paying for all of them.

Why It Looks Like the AOV Per Item Decreases:

When offering Buy X, Get Y or giving out volume discounts, customers receive more items for the same price or less, which can make the AOV per item look lower. However, this doesn’t mean it’s a bad thing.

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What Really Matters: AOV Per Transaction

In both scenarios, the customer is spending more overall (from $40 to $54), but in Scenario 2, they receive more items. Here’s why it works:

• Moving More Inventory: Promotions like Buy X, Get Y and Volume Discounts are designed to encourage customers to purchase more items, increasing the overall sales volume and moving inventory faster.

• Higher Perceived Value: The customer feels like they are getting a great deal with both a free product and a discount, enhancing their satisfaction.

• Higher Total Profit: In Scenario 2, the store’s profit increases from $24 to $26, despite the AOV per item dropping slightly. The total number of items sold (7 items instead of 4) and the higher overall transaction value increase total sales.

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Revisiting the Example:

• Scenario 1 (No Promotion): AOV = $40 (4 items). AOV per item = $10 ($40 ÷ 4 items). Profit = $24

• Scenario 2 (With Promotion): AOV = $54 (7 items). AOV per item = $7.71 ($54 ÷ 7 items). Profit = $26

Even though the AOV per item decreases to $7.71, the customer buys more, resulting in higher revenue and profit overall.

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Why It's Still Beneficial:

• Moving More Inventory: By combining these promotions, you encourage customers to buy more, helping you move inventory faster and increase sales volume.

• Higher Total Sales: While the AOV per item might drop, the AOV per transaction and the total number of items sold increase, leading to higher overall revenue and profit.

• Customer Satisfaction: The dual benefit of a free item and a discount creates a more satisfying shopping experience, which can lead to repeat purchases and improved customer loyalty.

Best Products for This Combination

The best products for combining Buy X, Get Y (BXGY) and Volume Discount are typically items that:

1. Are frequently bought in bulk or large quantities: These promotions work best when customers are incentivized to buy more of the same or similar items.

2. Have a low-to-moderate price point: This makes it easier for customers to justify buying more to qualify for both the free product (BXGY) and the volume discount.

3. Have complementary or replenishable qualities: Products that are often used together or need frequent replacement make it more likely that customers will buy larger quantities to unlock the promotions.

Skincare and Beauty Products

Why It Works: Skincare and beauty products like cleansers, moisturizers, and serums are often purchased in sets. Offering a Buy X, Get Y deal on items like face masks and pairing it with a volume discount encourages customers to buy more while enjoying both savings and extra products.

Example:

• Buy X, Get Y: “Buy 2 moisturizers, get 1 free.”

• Volume Discount: “Buy 5 or more skincare products and get 10% off.”

Fitness Equipment and Accessories

Why It Works: Fitness gear, such as resistance bands, dumbbells, or yoga mats, is often purchased in multiples or sets. Combining Buy X, Get Y with a volume discount allows customers to build their fitness collection while saving more when they buy in bulk.

Example:

• Buy X, Get Y: “Buy 3 resistance bands, get 1 free.”

• Volume Discount: “Buy 6 or more fitness accessories and get 15% off.”

Clothing and Apparel

Why It Works: Clothing items, particularly basics like socks, t-shirts, or workout gear, are commonly bought in larger quantities. A Buy X, Get Y deal pushes customers to buy more, while a volume discount on bulk purchases helps them save more as they buy additional items.

Example:

• Buy X, Get Y: “Buy 2 t-shirts, get 1 free.”

• Volume Discount: “Buy 8 or more apparel items and get 10% off.”

Office Supplies

Why It Works: Office supplies like notebooks, pens, and folders are often purchased in bulk, especially for schools or businesses. A Buy X, Get Y offer makes it easy for customers to stock up, while a volume discount further encourages larger purchases.

Example:

• Buy X, Get Y: “Buy 3 notebooks, get 1 free.”

• Volume Discount: “Buy 10 or more office supplies and get 10% off.”

Home Goods and Kitchenware

Why It Works: Kitchen and home products such as utensils, glassware, and cookware are often bought in multiples, especially for those setting up or upgrading their kitchen. A Buy X, Get Y deal on utensils, for example, coupled with a volume discount on bulk orders, motivates customers to buy more.

Example:

• Buy X, Get Y: “Buy 3 kitchen utensils, get 1 free.”

• Volume Discount: “Buy 8 or more kitchen items and get 15% off.”

Health and Wellness Products

Why It Works: Health and wellness items, such as supplements, vitamins, or protein powders, are frequently bought in larger quantities. Offering a Buy X, Get Y deal combined with a volume discount makes it attractive for customers to stock up while enjoying significant savings.

Example:

• Buy X, Get Y: “Buy 2 bottles of vitamins, get 1 free.”

• Volume Discount: “Buy 5 or more supplements and get 10% off.”

Baby Products

Why It Works: Baby essentials like diapers, wipes, and clothing are often purchased in bulk. Offering a Buy X, Get Y deal allows parents to stock up on much-needed items, while a volume discount further encourages larger purchases.

Example:

• Buy X, Get Y: “Buy 2 packs of diapers, get 1 free.”

• Volume Discount: “Buy 5 or more baby products and get 10% off.”

Conclusion

Combining Buy X, Get Y and Volume Discount is a smart way to incentivize customers to make larger purchases while protecting your profit margins. It’s especially effective for clearing inventory, increasing average order value (AOV), and enhancing customer satisfaction. With the right strategy, this combination can help you drive more sales and create a more engaging shopping experience for your customers.