How to Calculate BO-GO for the Books and Returns

Buy on get one free promotions - calculating for the books...“Buy-one-get-one free of equal or lesser value” is a promotional tactic used by many retailers. I recently used it in a promotion and we had to develop a way to insert these transactions into the books and calculate returns if needed.

After coming up with the algorithm, I thought it might interest other business owners/ merchandisers running the same type of promotion:

To calculate the sale, you need to take into account the percentage off each pair of products bought. Make the total of each pair and then find the percentage off each of the items.

For example: a customer buys 6 products.

  1. Item 1:$69.50
  2. Item 2:$44.50
  3. Item 3:$129.00
  4. Item 4:$106.00
  5. Item 5:$178.00
  6. Item 6:$166.00

The total cost: $693.00
To calculate the discount you need to sort the Items by price:

  1. Item 2:$44.50
  2. Item 1:$69.50
  3. Item 4:$106.00
  4. Item 3:$129.00
  5. Item 6:$166.00
  6. Item 5:$178.00

Then you can see that the total discount would be the $44.50+$106.00+$166.00 = $316.50 So the total transaction would be: $376.50

However, what happens in the books? what would happen if the customer chooses to return item #3? What should he be reimbursed?

To calculate you should have your POS configured for such a promotion. If you have your own in house POS, then you need to insert the following algorithm:

You need to calculate the individual discount for each item in the list.
To do so, you need to pair up again and find the percentage off each items of the pairs.

I think the best way to explain it by sharing a spreadsheet.
go to the Bo-Go calculation sheet now

As you can see in the table, if the customer returns $106.00 item, they should only receive $58.19 back. Also, in the books, this should be the price the product eventually sold for.

I hope this helps someone trying to do the same promotion, please let me know how it goes!

Author: Amitai Sasson

Amitai Sasson is the Online Marketing Director at overstockArt.com. With a Masters Degree in Computer Science and an MBA from Tel Aviv University, he has a unique perspective on the explosion of data mining capabilities and the e-commerce realm.

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