What's the point of "Buy One Get One for a Penny/Nickel/Dime/Dollar" sales?

Basically any “Buy One Get One Free” style sale where instead of getting the second free you basically get the second for 99% off. (Note this only applies for getting stuff at 99% off, buy a burger get a second for a dollar doesn’t count but I’m including the dollar example for when you see sales of “Buy a $60 game and get the second for $1”)

Is there any real advantage in not just making the second free? Is there some weird tax thing going on? Does it somehow look better on the books if you make 1% more sales over a normal free promotion?

I’m sure it’s a tax break angle. If they give it away, it’s a gift, but if they sell it for a penny, they can write off a certain amount as a loss.

No they’re not making a gift of it, you need to purchase the other one to get it. It would be no different than a two for the price of one sale. I’ve also seen buy two get three free sales in the past year or so on Coke products. Those are not cost basis is just divided between them.

No i think it’s legal and admin reasons.

If you’ve sold a thing for 1c it’s absolutely definitely a “sale” and all the legal mechanisms for buyers and sellers kick in.

Plus a “sale” of 0.00 might have admin and IT issues

Perhaps I’m way off-base, but some marketing models are based on appealing to price-conscious customers while exploiting less-informed customers.

If a customer purchases a ‘Buy One Get One Free’ item but brings only a single item to the cashier, there’s a moral obligation to give the customer his free item. But if it’s a ‘Second Item for Only 10 cents’ they can argue “We figured you only needed one and wanted to save the 10 cents”!

It might also just be a way to make the sale look different from all of the BOGOF sales out there, and hence more memorable, and hence more effective as marketing.

A guess from working retail and observing customer behaviour: some people will only want one, but if it’s BOGOF, then almost everyone will take the second, even if they really don’t want it. Add even a minuscule charge and a significant number of customers will turn it down.

Those who think it’s a great deal will still think it’s a great deal as it’s only a token more, but it saves wasting stock on those who don’t care, who are likely to give the unwanted one away to someone who now won’t come in and buy one (and get tempted by something else).

If that were the reason, then I’d presume it would be more beneficial for the seller to give the second item away for free. Many jurisdictions are more generous, when it comes to liability under private law, to donors of a free gift than they are to sellers of an item under a contract of sale.

My feeling is (but I admit I have no insight knowledge) that it’s simply a psychological tactic for promotional purposes. Under a “buy one get one free” scheme, most people realise that they’re not actually getting the second item for free; they’re simply buying two items, at a price which is ostensibly the price of one but really calculated to cover two items, and the option to buy really just one is not offered. Under a “buy one get the second for a penny” offer, you have the feeling that you have the option to buy one if you want to do so, but that this purchase also gets you the opportunity for a unique bargain which you should not miss.

In Pennsylavania a liquor license holder can not give away alcohol. Places that offer “buy six beers and get the seventh for a penny” are staying on the right side of the law. A friend who owns a bar was fined when his manager posted a Facebook update that read “buy six and the seventh is free”.

For their customer appreciation party, Bells Brewing provided Two Hearted to the bar for free. Customers were charged a dime for a pint glass to keep it legal. Being a smartass, I walked in waving a roll of dimes.

The important information here is to know that if someone is selling something at BOGOF, the store’s true cost of the item is less than 50% of the asking price.

There can be times where selling something at a loss makes economic sense, yes. But it’s not the way to bet in most cases.

I’ve worked in the back room in retail enough to know that the cost of the item is at most 50% of the original asking price except on big ticket items. And the cheaper the item is, the higher the markup as a percentage. When I put a $250 price tag on a television (this was in the 80s), the wholesale would be about $125. But a dress with a cost of $7.00 would initially get a $30-$40 price tag. But depending on how well they sold they could get marked down enough times that the last few remainders sold for less than cost.

It’s overhead that brings the net profit levels down to the 3-4% you sometimes read about.

Indeed. That’s why I used the phrase ‘true cost’ instead of ‘cost’. There are a lot of factors in that. Even selling items below ‘cost’ there’s a tax write down and opportunity cost of having the item taking up storage and shelf space. So yeah, we agree.

Invariably, no matter how low the cost of the second non-free item, some consumers will not buy that second item. Buy one at 5 dollars and get one free (BUY ONE; GET ONE FREE!) = you move two items for say 5 dollars.

What we know is that even at extremely low values for the second item, a % of people won’t buy that second item. Moving more inventory, boosting demand, making more than giving away second item, less price jockeying = don’t give away the second item… yet.

Depending on the product and the time to expiration/loss, it is often best to start with a Buy One and get a second one for some very, very low price first and resort to Buy One Get One Free as the final move.


Markup varies greatly by item. The markup on electronics and groceries are very small, often in the single digits. Compare the prices at Costco whose pricing model is no more than 15% markup (on their huge volume purchases) on what they sell against retail stores and the prices are usually really close.

With few exceptions like clothing prices which are based on seasonal and fashion trends, there’s too much competition, especially from online sources for stores to maintain artificially high markups. This is why when you buy a new electronic item, everyone in the store pushes you to by add-ons like cables and extended warranties, because these are point of purchase impulse buys that people typically won’t shop around for.

A few years ago, one of the big retailers (Montgomery Ward, perhaps?) changed their pricing policy. Instead of putting one department on sale every week, they would have lower prices on everything, all the time.

It was a dismal failure.

People don’t want to pay $100 for a $100 item. They want a $200 item that’s “on sale for a 50% off”. They would rather have the illusion of a grand bargain than the reality of a fair price. They want the illusion that their stuff is worth more than it really is.

That is really all there is to it. The accounting and tax implications are not an issue for a BOGOF sale. It’s not accounted for as a gift. The exception would be alcohol sales, which in some jurisdictions cannot be free, as noted by kayaker. I was at my regular hangout bar in 1984 when a local radio station wanted to have a Free Beer Friday to promote the station, but they found out it couldn’t be free. So they charged 1 cent per beer. The place was an absolute madhouse. One asshole gave a waitress a nickel and wanted change.

JC Penney’s. Proof that consumers are easily manipulated by fake sales.

Sears tried that.

JC Penney’s tried to be honest with their customers, and their customers punished them for it!

it was jc penny

My guess too, and a guess at the mechanism. In BOGOF sales you only really see one price. In one cent sales you see two, and people anchor on the penny as a price, which seems cheaper than the full price, even if the price per item is effectively equivalent and half the higher price.
I know BevMo does one cent wine sales all the time, but is this common for non-alcoholic products? Interesting about the prohibition on giving booze away, that might explain it.