How does the concept of “Buy one get one free” works in marketing? How does this strategy prove profitable for companies?

Question

How does the concept of “Buy one get one free” works in marketing? How does this strategy prove profitable for companies?

In: Economics

Answer 1

Option 1. The cost of the two items is profitable or at least breaks even, at the sale price of 1 (ie it costs the seller $1 for one item they the sell for at least $2)

Option 2. Loss leader- you come in to buy the special and walk out with other items that are more profitable.