Is “Buy One Get One Free” Really a Deal? The Psychology and Economics Behind 1+1 Promotions

Explore how BOGO deals exploit consumer psychology—and who really wins: you or the company.

Table of Contents

1.   The Everyday Temptation: A Convenience Store Scenario
2.   The Zero-Price Effect: Why “Free” Is So Powerful
3.   Why Companies Keep Running BOGO Campaigns
4.   Why It Looks Like a Loss but Isn’t One
5.   How Smart Consumers Actually Win
6.   Key Takeaways and Verified Sources

1. The Everyday Temptation: A Convenience Store Scenario

After a long day, a tired office worker stops by a convenience store for a coffee. At the counter, a bright sign reads “1+1 Event.” “Two for the price of one—what a deal,” she thinks, and buys two cups. Days later, one cup sits forgotten, expired in the fridge.

This is a classic case of present bias—the tendency to overvalue immediate rewards and undervalue future outcomes. Behavioral economists have consistently shown that short-term gratification, such as a discount or reward, often leads to irrational spending.

Source: Behavioral Economics Guide 2023 – Present Bias and Consumer Behavior

2. The Zero-Price Effect: Why “Free” Is So Powerful

The phrase “Buy one, get one free” shifts the way people perceive value. The Zero-Price Effect explains that when a price hits zero, human choice changes disproportionately.

In a 2007 study published in Marketing Science, researchers Dan Ariely, Kristina Shampanier, and Nina Mazar demonstrated that when the price of chocolate dropped to “free,” purchase rates spiked far more than when it merely dropped by one cent. A price of zero triggers an emotional, rather than rational, response.

BOGO deals exploit this effect. Consumers must buy two items to receive the benefit, yet they perceive it as “half-off” or “one free,” often purchasing more than they originally intended.

Source: Shampanier, Mazar, and Ariely, “How Small Is Zero Price? The True Value of Free Products,” Marketing Science (2007)

3. Why Companies Keep Running BOGO Campaigns

Companies rarely launch BOGO events just to be generous. Their primary goals are to increase inventory turnover, boost product trials, and collect consumer data.

In categories like food and beverages, where shelf life is short, unsold stock quickly becomes waste. A 1+1 event moves products fast and introduces new items to hesitant buyers.

According to the 2023 report Ultimate Guide to Pricing & Promotion by NIQ (formerly NielsenIQ), promotional campaigns improve product trial and short-term conversion, but results vary greatly depending on category, duration, pricing, and placement.

Essentially, a BOGO offer is a strategic trade-off: a small profit sacrifice for greater market share and valuable behavioral data.

Source: NIQ, Ultimate Guide to Pricing & Promotion, 2023

4. Why It Looks Like a Loss but Isn’t One

To consumers, BOGO seems like a 50% discount, but businesses structure it differently.

First, costs are shared between manufacturers and retailers; neither party shoulders the full burden.

Second, such events serve as marketing experiments. As Harvard Business Review explains, a good retail promotion is less about slashing prices and more about testing questions such as “when,” “where,” “to whom,” and “how long.”

In other words, 1+1 campaigns are not merely sales tactics—they’re controlled experiments in consumer behavior and pricing elasticity.

Source: Harvard Business Review, “For Better Retail Promotions, Ask These Questions,” 2018

5. How Smart Consumers Actually Win

There are two key principles for consumers to make BOGO truly beneficial:

1) Calculate the unit price. If you wouldn’t normally buy two, it’s not a deal. Short-lived products like yogurt or bread often go to waste. Long-lasting items such as bottled water, detergent, or paper towels, on the other hand, can yield genuine savings.

2) Track price history. Some brands raise prices right before promotions to exaggerate the discount. To prevent such deception, the European Union amended Directive 98/6/EC with Directive (EU) 2019/2161, requiring that when a price reduction is announced, the lowest price within the previous 30 days must be displayed as the reference.

This law, now standard across EU member states, helps consumers verify whether a “discount” is real.

Source: European Commission, Directive (EU) 2019/2161 amending Directive 98/6/EC on the indication of the prices of products offered to consumers, EUR-Lex, 2022

6. Key Takeaways and Verified Sources

• Present bias causes consumers to overvalue immediate rewards like discounts.
• The Zero-Price Effect makes “free” offers feel disproportionately valuable.
• NIQ (2023) reports that promotions can drive product trial and conversion, though   effectiveness depends on category and context.
• HBR (2018) advises that retail promotions should be data-driven experiments, not just markdowns.
• EU Directive (EU) 2019/2161 mandates the 30-day lowest-price rule to ensure transparency in advertised discounts.

In short, BOGO promotions delight shoppers but also serve as corporate tools for data, brand exposure, and loyalty building. Understanding this dual structure helps consumers buy wisely—valuing what they need, not just what seems free.

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