Gift With Purchase for Subscriptions

A gift with purchase on a one-time order has one moment to land: the checkout. A subscription gift with purchase has many. The shopper can get a gift on the first box, on the fourth box, or when they come back after cancelling, and each of those moments costs a different amount, reaches a different share of subscribers and promises something different. This guide prices the three placements per subscriber with stated assumptions, reads what Shopify's discount documentation says a discount can and cannot target, and shows how to word the gift so a subscriber knows what it depends on.

Three places a gift can land

1. The first order. Every new subscriber gets the gift with the first delivery. It is the easiest to explain and the most expensive, because it is paid for by everyone who signs up, including the ones who cancel after one box.
2. A cycle milestone. The gift arrives with a later delivery, for example the fourth. It is paid only for the subscribers who stay that long, and it gives the people thinking about cancelling a reason to wait one more cycle.
3. Reactivation. A subscriber who cancelled and returns gets a gift with the first box back. It is likely the cheapest in total if only a small share of cancelled subscribers return, and it is the hardest to set up.

What each placement costs per starting subscriber

Every figure below is an assumption. Replace each with your own before deciding anything, and note that none of this is a benchmark of what stores see.

• A box sells for 24 dollars, and product margin is 60 percent, so each box contributes 14.40 dollars before shipping.
• The gift has a landed cost of 9 dollars.
• Take 100 new subscribers over a six-box window. The number still subscribed for each box is 100, 70, 55, 45, 38 and 33.
• Across the window that is 341 boxes, or 341 × 14.40 = 4,910.40 dollars of contribution before gifts, which is 49.10 dollars per starting subscriber.
• Of the 100, 67 have cancelled by the sixth box. Assume 10 percent of them come back and receive a reactivation gift, which is 6.7 subscribers.

Two things follow from the arithmetic. The first-order gift consumes nearly a fifth of the window's contribution, and on the first box alone the subscriber contributes 14.40 − 9.00 = 5.40 dollars, so a subscriber who leaves after one box leaves you 5.40 of the 14.40 dollars that box would otherwise contribute, or 37.5 percent. The milestone gift costs less than half as much per starting subscriber, and it has a testable benefit: it pays for itself if it produces 4.05 ÷ 14.40 = 0.28 extra boxes per starting subscriber. That is about 28 extra boxes across 100 subscribers, which you can compare with your own cancellation curve after a run.

The reactivation figure is small because it depends on an assumption you cannot check until you try it. If 10 percent is wrong by a factor of three, the cost per starting subscriber is still under 2 dollars. That is a reason to test reactivation first, and a reason not to count on it as a growth lever.

Our guide to customer lifetime value on Shopify shows how to replace the survival numbers with your own order history.

What Shopify's discounts can target

Start with what is documented, because it decides which of the three placements you can build with a discount.

Shopify's Help Center page on Buy X get Y discounts says customers must add all items to their cart manually and that the free or discounted "get" item is never automatically added to the cart. It also describes a Purchase type choice: if subscriptions are activated on your store, you can set the product to be a one-time purchase, a subscription or both. The page lists that choice only in its mobile steps for a discount code, not in its desktop steps or its automatic-discount steps, so check what your own admin offers before you rely on it.

The developer documentation is more specific. The DiscountCustomerGets object, which describes the items that qualify for a discount, has a field appliesOnOneTimePurchase, described as whether the discount applies on regular one-time-purchase items, and a field appliesOnSubscription, described as whether it applies on subscription items. A separate object, DiscountAutomaticBasic, has a field recurringCycleLimit, described as the number of billing cycles for which the discount can be applied, which is useful for subscription-based discounts. The documentation's example is that a limit of three applies the discount only to the first three billing cycles of a subscription, and a value of 0 applies it indefinitely.

Now the gaps, stated plainly because they matter:

• The DiscountAutomaticBxgy object, which is the Buy X get Y automatic discount, lists no subscription field of its own and no billing-cycle limit on its page. Its customerGets field uses the DiscountCustomerGets object, so the one-time and subscription flags above are where purchase type lives for it.
• The cycle limit counts from the start. We found nothing in the pages we read that targets a single later cycle, such as "only the fourth delivery," or a returning subscriber.
• The Subscriptions page in the Help Center says you can add a subscription as a purchase option to sell products on a recurring basis. It does not discuss discounts.

In practice: a first-order gift can be built from the documented purchase-type options. A milestone or reactivation gift is a subscription-app job, or a manual one, and you should confirm what your subscription app can trigger on a given cycle before you promise it.

The matching option in our editor

In the Freebies Engine by Log Studio Lab editor, offers that take a purchase type show a field labeled Apply to, with two checkboxes: One-time purchases and Subscriptions (Skio and selling plans). At least one must stay checked. Turning off subscriptions keeps the discount off subscription lines; the field is live for order discounts. The field appears only on templates that take a purchase type, so open the template you plan to use and confirm it is there.

The Subscription cycle pricing template is described as "Different prices for each delivery of a subscription." It is the template for per-delivery price steps, such as a lower price on the first box. See the plan requirements on the pricing page.

Stock the milestone gift

A milestone gift is an inventory commitment that arrives months after the sign-up. Using the table above, a cohort of 200 new subscribers a month creates 200 × 0.45 = 90 gift obligations for the fourth box, three months later if your boxes ship monthly. The cohort you recruit this month decides the stock you need in the month the milestone arrives. Add the numbers for each cohort still in the pipeline, and reorder against that total instead of last month's sales. Our guide to free gift margin math covers the landed cost to use for each unit.

Tell subscribers what the gift depends on

The FTC's guide on the word "free" (16 CFR 251.1) says that the terms, conditions and obligations on which receipt of a free item depends should be set out clearly and conspicuously at the outset of the offer, in close conjunction with it, and not in a footnote. The guide is about the word "free" in advertising, and it does not mention subscriptions, but the point carries over: put the condition where the promise is. This is not legal advice. A subscriber who is promised a gift and later learns it needed four boxes will cancel and complain.

• First order: "A gift in your first box when you start a subscription."
• Milestone: "A gift with your fourth delivery." Repeat it in the confirmation email and on the manage page, and send a reminder one cycle before it.
• Reactivation: "A gift with your first box when you restart." State the window if there is one.

If you also run free shipping on subscriptions, the subscription free shipping guide costs that policy across a subscriber's life, so you can see the two promises together. A first-order gift also invites sign-up-and-cancel behavior, so read our guide to free gift abuse for the guardrails that apply to any gift offer.