Buy One Get One (1+1) Price Calculator

Understanding the buy one get one (1+1) price calculator — concept and principle

A buy-one-get-one (1+1) offer gives the customer two units for one price. This calculator finds the lowest price you can charge for that two-unit set and still keep your target margin after percentage fees such as marketplace commission or card processing. Sellers use it before launching a promotion to check that "free" does not mean "loss-making".

How it is calculated

• Minimum set price P = 2 × unit cost ÷ (1 − target margin − fees).
• Effective price per unit = P ÷ 2 = unit cost ÷ (1 − target margin − fees).

Unit cost is what one unit costs you. Target margin and fees are both percentages of the selling price, entered as whole numbers (40 means 40%). The calculator works with any currency.

The principle

Out of every sale, a fixed share goes to fees, a share must be left over as profit, and what remains has to cover the cost of the goods. Written as an equation for the set: P − fees × P − 2 × cost = margin × P. Solving for P gives P = 2 × cost ÷ (1 − margin − fees). Because both margin and fees are measured on price, they come out of the same 100% of revenue, which is why they are subtracted together. If margin plus fees reach 100%, there is nothing left to pay for the goods and no price can work.

Worked example

1. Inputs: unit cost $6, target margin 40%, fees 10%.
2. Cost of the set = 2 × $6 = $12.
3. Share of price left for goods = 1 − 0.40 − 0.10 = 0.50.
4. Minimum set price = $12 ÷ 0.50 = $24.00.
5. Effective price per unit = $24 ÷ 2 = $12.00.
6. Check: fees $2.40, goods $12, profit $24 − $12 − $2.40 = $9.60, which is 40% of $24.

How to read the result

The set price is the floor for the promotion, not necessarily the right price. Compare it with the normal single-unit price customers already know. If the minimum set price is higher than your usual single price, a true 1+1 offer cannot hit your margin target; you could lower the target, offer "buy two, get a discount" instead, or use 1+1 only as a short traffic-building campaign. A per-unit price far below competitors may also train customers to wait for promotions.

Common mistakes

• Pricing the set from one unit's cost and forgetting that you ship and pay for two.
• Treating margin as markup on cost. A 40% markup on $12 is $16.80, far below the $24 needed for a 40% margin.
• Leaving out fees that are charged on the selling price.

Frequently asked questions

What is the difference between margin and markup?

Margin is profit as a share of the selling price; markup is profit as a share of cost. A 40% margin equals a markup of about 66.7%.

Does a 1+1 deal mean a 50% discount?

For the customer, yes: each unit costs half the single price. For you, the effect on profit is larger, because the cost of goods doubles while revenue stays at one unit's price.

Why does the result become negative or impossible?

When target margin plus fees is 100% or more, the denominator is zero or negative. Lower the margin target or reduce fees.

Sources: Thomas T. Nagle and Georg Müller, The Strategy and Tactics of Pricing, 6th ed. (Routledge, 2018)