---
title: "Does a buy-two-get-one-free promotion make money? A per-order method"
description: "A buy-two-get-one-free (2+1) promotion makes money when a three-unit order, after the cost of all three units, one parcel and the advertising cost of one order, still leaves positive contribution. Measure it per order, split by units per order, on delivered orders only, with the free unit charged at full cost."
date: 2026-10-11
lang: en
canonical: https://goingstellar.ro/methods/buy-two-get-one-free-promotion-profitability/
author: Going Stellar
publisher: GOING STELLAR S.R.L.
topic: E-commerce / Promotions
license: CC BY 4.0
alternate_ro: https://goingstellar.ro/ro/metode/promotia-2-plus-1-gratis-profitabilitate/
---

# Does a buy-two-get-one-free promotion make money? A per-order method

*A buy-two-get-one-free (2+1) promotion makes money when a three-unit order, after the cost of all three units, one parcel and the advertising cost of one order, still leaves positive contribution. Measure it per order, split by units per order, on delivered orders only, with the free unit charged at full cost.*

> E-commerce · Promotions · 2026-10-11 · https://goingstellar.ro/methods/buy-two-get-one-free-promotion-profitability/

## Key points

- A buy-two-get-one-free promotion makes money only if the average delivered three-unit order leaves positive contribution after VAT, the cost of all three units, shipping and the advertising cost of one order.
- The free unit has no price but a full cost, and leaving that cost out overstates every promotional order by the cost of one unit.
- Compared with a single-unit order, a 2+1 order earns more only while the unit cost of goods is below half the unit price without VAT.
- Measure promotions per order, split by units per order, because shipping and advertising are paid per order, not per unit.
- A per-tier table cannot show how many customers would have bought two units anyway; only a test with and without the offer can.

## The short answer

A 2+1 promotion makes money if the average delivered three-unit order still leaves positive contribution after VAT, the cost of all three physical units, shipping and the advertising cost of one order. Contribution per order is what the customer paid without VAT, minus cost of goods, minus shipping without VAT. The free unit has no price, but it has a full cost, and leaving that cost out is the most common way a promotion looks profitable on paper.

We sell several product lines cash on delivery, and on some of them 2+1 is the standard offer, so the promotion is effectively the business. Our promo report splits delivered orders into tiers by units per order (1, 2, 3 and 4 or more) and shows contribution per order in each tier. The three-unit tier is the one to read.

## Why the order, not the unit, is the unit of analysis

Shipping and advertising are paid per order. One parcel carries three units for about the cost of one, and an ad campaign buys an order, not a single product. A promotion that moves customers from one unit to three spreads those two per-order costs across more revenue. That is the whole case for 2+1, and the same arithmetic shows when the case fails: every promotional order also carries the full cost of one unit that brings no revenue.

On stores where most orders are bundles, per-product rules mislead. A product priced well below the average order value is not a weak product when customers buy it three at a time; the order is the economic unit, so decisions about a 2+1 store should be taken on orders.

## The method, step by step

**1. Delivered orders only.** Use courier statuses, over a window long enough for parcels to finish their journey; our report defaults to 90 days. Refused cash-on-delivery orders are not revenue. The shipping wasted on refusals belongs in the delivery analysis and must be added back before the final verdict.

**2. Count physical units, including the free one.** Put each order in a tier: 1, 2, 3 (the 2+1) or 4 or more units.

**3. Revenue is what was actually paid, without VAT.** Take the order total and divide by (1 + VAT). Do not rebuild revenue from list prices. In order data the free unit often keeps its list price with a 100% discount, and the discounted line total already reflects that, so subtracting the discounts again counts them twice.

**4. Cost of goods on every physical unit, without VAT.** Real per-product costs are best. Our report can also estimate cost as a percentage of list value; with that estimate the absolute margin is approximate, but the comparison between tiers stays reliable.

**5. Shipping, real and without VAT, per order.**

**6. Contribution and margin per tier.** `contribution = paid ÷ (1 + VAT) − goods (all units) − shipping ÷ (1 + VAT)`; margin = contribution ÷ revenue without VAT. Our report flags a tier green when its margin is at least 10%, yellow below 10%, and red when it loses money.

**7. Subtract advertising per order.** Spread advertising evenly across delivered orders, because ads buy orders, not units, then compare that cost with the contribution of the tier that holds most orders.

## A worked example with hypothetical numbers

The numbers below are round and hypothetical. Inputs: list price 50 per unit including VAT, VAT 25%, cost of goods 10 per unit without VAT, shipping 15 per parcel without VAT, free shipping for the customer, advertising 30 per delivered order.

**One unit.** Revenue: 50 ÷ 1.25 = 40. Contribution 40 − 10 − 15 = 15. After advertising: 15 − 30 = −15, a loss on every single-unit order.

**2+1, three units.** The customer pays 100. Revenue: 100 ÷ 1.25 = 80. Goods for three units: 30. Contribution 80 − 30 − 15 = 35. After advertising: 35 − 30 = 5, a small gain.

**The naive version.** Charging goods only for the two paid units gives 80 − 20 − 15 = 45, which overstates every promotional order by 10, the cost of the free unit.

**The general rule.** Compared with a single-unit order, the 2+1 order adds one paid unit of revenue (40) and two units of cost. It earns more only while the unit cost is below half the unit price without VAT, here below 20. Raise the unit cost to 25 and the single-unit order leaves 40 − 25 − 15 = 0, while the 2+1 order leaves 80 − 75 − 15 = −10: the promotion now loses money before any advertising.

## What the per-tier table cannot tell you

A per-tier table describes the orders you got, not the orders you would have got without the promotion. A customer who would have paid for two units anyway now receives a third for free. In the hypothetical example two units at full price leave 80 − 20 − 15 = 45, so for that customer the promotion costs exactly one unit's cost, 10. Only a test with and without the offer, or a price change, can show how many customers were moved up and how many were simply given a unit.

Shipping fees blur the picture. If the store charges shipping below a free-shipping threshold, the order total includes that fee, which roughly pays the courier and is not product revenue; on those orders the discount also looks smaller than it is. Whether the three-unit bundle crosses the free-shipping threshold is a pricing decision in its own right. A practical detail: set the list price so that the effective price per unit, two thirds of the list price, is a round number.

## Where we were wrong

**We subtracted the discount twice.** Our product analytics took the discounted line totals and then subtracted the discount allocations again. On a 2+1 store that under-reported revenue by about 36% until we compared one order line by line with the store's own subtotal.

**We read discounts from the lines only.** Discounted unit prices catch line discounts such as the free unit, but not discounts applied to the whole order. Complimentary orders with a full order-level discount entered our reports at full price. We now scale line prices to the order subtotal.

**We trusted catalogue cost shares.** The catalogue assumes one unit per order; with 2+1 the real share of goods in revenue was higher, so the true room for advertising was smaller.

**We assumed the promotion travels with the order.** Automatic store discounts are not applied when staff create a replacement order by hand, so replacements came out at the wrong value until we copied the discount from the original order. And a calculated shipping of zero can mean that no rate was chosen, not that shipping is free.

**We planned a new market on the wrong order value.** For one launch the planned order value was higher than a three-unit order at the local market price; at the real price the 2+1 left almost no room for advertising. The per-order arithmetic now comes before the launch, not after it.

## Limits, and a short checklist

The method measures contribution, not profit: fixed costs, returns after delivery and the cost of refused parcels sit outside it. A cost estimated as a percentage of list value gives approximate margins. Averages per tier hide products whose unit cost is close to half the unit price, which is where 2+1 turns from gain to loss.

Checklist: delivered orders only, from courier statuses; tiers by physical units including the free one; revenue from the order total without VAT, discounts counted once; goods charged on every unit; shipping per order without VAT; advertising spread per order; refusal shipping added back; the free unit's cost compared with half the unit price without VAT; a test with and without the offer before calling it a success.

## Questions and answers

### Is a buy-two-get-one-free offer profitable?

It is profitable when a delivered three-unit order still leaves money after VAT, the cost of all three units, one parcel and the advertising cost of one order. The offer works by spreading per-order costs, shipping and advertising, across more revenue. It fails when the unit cost of goods is high: compared with a single-unit sale, 2+1 earns more only while unit cost stays below half the unit price without VAT.

### How do I calculate the margin of a 2+1 promotion?

Take delivered orders and group them by physical units per order, including the free unit. For each group, divide what customers paid by one plus VAT, subtract cost of goods for every unit and shipping without VAT, and divide the result by revenue without VAT. Then subtract advertising per order. Read the three-unit group, because that is where the promotion lives.

### Should the free item in a promotion be counted in cost of goods?

Yes. The free item is a physical unit that was bought, stored, packed and shipped, so its full cost belongs in cost of goods even though its price is zero. Leaving it out makes every promotional order look better by the cost of one unit, and on low-margin products that difference alone can turn a loss into an apparent profit.

### Why measure promotion profitability per order instead of per product?

Because shipping and advertising are paid per order. One parcel and one advertising cost cover the whole order whether it holds one unit or three. Per-product margins ignore that, so a cheap product sold three at a time can look weak per unit while its orders are healthy, and the reverse can also happen.

### Do refused cash-on-delivery orders affect a promotion's profitability?

Yes, but in a separate step. Refused orders are not revenue, so they do not belong in the per-order contribution of delivered orders. Their outbound shipping was still paid, however, so the cost of refused parcels must be added back before deciding whether the promotion makes money overall.

## How to cite

**Cite this as:** Going Stellar (2026). *Does a buy-two-get-one-free promotion make money? A per-order method*. GOING STELLAR S.R.L.. https://goingstellar.ro/methods/buy-two-get-one-free-promotion-profitability/

```bibtex
@misc{goingstellar2026buy,
  title  = {Does a buy-two-get-one-free promotion make money? A per-order method},
  author = {{Going Stellar}},
  year   = {2026},
  url    = {https://goingstellar.ro/methods/buy-two-get-one-free-promotion-profitability/},
  note   = {2026-10-11}
}
```

Licence. Free to quote with attribution.

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- This page as HTML: https://goingstellar.ro/methods/buy-two-get-one-free-promotion-profitability/
- Same article in Romanian: https://goingstellar.ro/ro/metode/promotia-2-plus-1-gratis-profitabilitate/