Go for BOGO Free Over BOGO Discounted

Beware BOGO, retailer! The most common form for a BOGO is “Buy one, get one for free.” The problem is that researchers at University of California-Berkeley, University of Southern California, Stony Brook University, and Indiana University find that if a product is seen by the shopper as being offered for free as part of the BOGO, the shopper devalues the worth of the product. They’ll resist paying full price for it afterwards.
     Based on results from their studies, researchers at Monash University said there’s an even worse version of BOGO: “Buy one, get one at a deep discount.”
     What people were willing to pay for a product after the BOGO promotion ended was higher when it had been offered for free than at a very low price. The reason is that when the companion item is offered for a very low price, this becomes the reference point for consumers. They then perceive the regular price as inordinately high. But people have a hard time assessing the value of “free.” Therefore, they’ll usually consider the reference point to be the price they’re paying for the qualifying part of the BOGO offer. As long as you keep that price close to what you’ll be charging for the free item post-BOGO, shoppers resist less.
     To decide if a price is high or low, shoppers set in their mind an anchor for what they consider to be a medium price. To have the customer purchase a higher-priced item, move the anchor point higher.
     Often, you’ll want to increase the shopper’s willingness to pay a higher price for a specific category of items, such as shoes, but not leave the shopper with the impression that your store policy is to charge high prices. Researchers at Hong Kong University of Science & Technology and Chinese University of Hong Kong suggest you encourage the shopper to deliberate on high-priced items in that category and make their purchase decision before looking at other categories of items.
     Or you might want to position your store as offering superior quality across categories, charging premium prices for the assurance. Here, before you introduce the shopper to the specific category sought, walk the shopper by high-priced items in other categories as you discuss how higher quality often comes with higher prices.

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Bundle Pricing, But Limit BOGOs 
Give Shoppers a Comparison Point 
Excite Shoppers with “100% Off” Sales 
Anchor Browsers onto Higher Prices 
Depend on Interdependency for Price-Quality