Buy X Get Y + Volume Discount
Learn how to Combine Buy X Get Y and Volume Discount to boost AOV this BFCM
Last updated
Learn how to Combine Buy X Get Y and Volume Discount to boost AOV this BFCM
Last updated
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.
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.
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.
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.\
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.
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
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.
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.
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.
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.
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.
The best products for combining Buy X, Get Y (BXGY) and Volume Discount are typically items that:
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.
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.
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.
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.
