272 Chapter 10 Product, Price, and Place Copyright Goodheart-Willcox Co., Inc. Buy One, Get One The buy one, get one (BOGO) technique gives customers a free or reduced-price item when another is purchased at full price. Depending on the promotion, the items may be the same or similar. Some stores have buy two, get one promotions and other similar offers. The BOGO technique conveys savings and value. Bundling Bundling combines two or more products for one price. Bundling can reduce the overall price when compared to buying the items separately. For example, a clothing store might bundle a $10 hat and a $20 T-shirt for a single price of $25. This bundled price saves the customer $5, and the store has sold two items instead of one. Bundling conveys savings and value. Price Lining Price lining is setting different levels of prices for similar products. This is done to differentiate between the quality and features of the products. Retailers sometimes use the terms good, better, best to describe their products and prices. Good conveys value, best conveys quality, and better conveys a balance between the two. Discount Pricing In retail businesses (B2C), when items are discounted from the list prices, they are on sale. Companies that sell products to other businesses (B2B) also use discount pricing techniques. The five most popular forms of discount pricing are: • cash discount • promotional discount • quantity discount • seasonal discount and • trade discount. Cash Discount A cash discount is usually a percentage removed from the total invoice amount. It is offered to encourage a customer to pay a bill early. A cash discount often shows up in a format similar to 2/10, net 30. The 2 reflects the percentage off the invoice total. The 10 indicates the number of days the customer has to pay the bill to receive the discount. The 30 stands for the number of days the customer has to pay the bill without receiving a penalty. This discount would be read, “2 percent off if paid within 10 days, otherwise the entire bill is due in 30 days.” Cash discounts encourage customers to pay bills early, which helps the business’ cash flow.