Multiple Unit Promotions are meant to increase the dollars or units per transaction. Success depends on cross-selling and upselling to your current customer base. Offers include a volume break when the customer purchases a minimum quantity that is higher than average. For example, an offer that is “2 for $30 or 3 for $40.” Or offering a price break on an ancillary item. “Free ream of paper when you purchase $50 or more.”
It is important to do the math to make your offers compelling. Multiple Unit Promotions must appeal to customers and be profitable for you. In a “2 for $30 or 3 for $40” offer, let’s assume your COGS is $8 for each item. When you sell “2 for $30” your gross profit is $14 or $7 per unit. When you sell “3 for $40” there are two ways of looking at the margin. One way is that you make $7 on the first two units and $2 on the third. That could lead you to delete that promotion. Another way to look at the promotion is that you make $16 on the sale or $5.33 per unit. If the sales lift that is greater than +30% during the promotion, you will have higher gross sales and gross profit.
Using the upsell model, you accomplish two things: increase sales and profits plus keep your customer out of the market. As a result, competitors will not be able to penetrate your customer base in the short term — a practice called “pantry loading.”