Explain why 1 free is free to the buyer but not to society?

Answer 1

"Buy 2 Get 1 Free" isn't even free to the buyer. It's a one-third off sale that only kicks in if you buy three of the item.

I have a product in my store that costs $9. Two of them cost you $18. If I mark them "Buy 2 Get 1 Free" you get three for $18, or $6 each--one-third off.

This is done for two reasons--to sell through product quickly, and because people will pay a lot of money to get something free.

I'll give you an example: The company who makes your best-selling product--one people buy many packages of at once...oh, we'll say it's soup--changed the packaging it comes in. If your shelf stockers put the new package next to the old one, the new package will sell through MUCH quicker than the old--after all, who wants to buy old stuff? The quickest way to rid yourself of the old is to cut the price on it. You could put a sign on the shelf, "33 Percent Off!" and watch it sell a little quicker, or you could just stack the soup in the middle of the floor, rip the box tops off, and write "Buy Two Get One Free!" on it. Do the second and people will start carrying full boxes of soup to the register.

If you do this in moderation it's not a problem. If you do it a lot--selling product dramatically cheaper than anyone else in town until everyone else in town goes out of business, like Walmart used to do--that's a serious problem.