What Is a Free Gift With Purchase?

A free gift with purchase is an item you give a shopper at no charge because they bought something else. The shopper pays the normal price for the thing they came for, and the gift is added on top. That is the whole idea, and it is also why the offer is easy to get wrong: the word "free" carries a promise, and the gift carries a cost that someone has to cover.

This page defines the offer, separates it from a discount, walks through the Federal Trade Commission's guide on the word "free" clause by clause, and ends with the cases where a gift is the wrong tool. If you already know you want one and need the settings, the step-by-step is in Free Gift With Purchase on Shopify, Explained.

What counts as a free gift with purchase

Three things have to be true for an offer to be a free gift with purchase.

1. There is a condition. The shopper has to buy something, spend a set amount, or add a particular product. Without a condition it is a giveaway, not a purchase incentive.
2. The gift is a separate item. The shopper receives an additional product. If the shopper pays less for the thing they bought, that is a discount.
3. The gift costs the buyer nothing. Not a reduced price, not "just pay shipping". The gift line is zero.

The FTC's guide opens with the same framing. In 16 CFR 251.1(a), it says that offering "Free" merchandise "is a promotional device frequently used to attract customers", and that providing it "with the purchase of some other article or service has often been found to be a useful and valuable marketing tool." The guide is not a statute, but it is the yardstick the agency publishes, so it is worth building your wording around it.

Gift vs discount: what the shopper sees and what you pay

Both a gift and a discount reduce what you earn on an order. They look different on the screen and cost you differently.

The cost row is the one to remember. A 10 percent discount on a 200 dollar cart costs 20 dollars; on a 40 dollar cart it costs 4 dollars. A gift that costs you 6 dollars costs 6 dollars on either cart. That makes a gift cheaper than a 10 percent discount on large orders and more expensive on small ones, which is exactly why the trigger matters.

What the FTC says about calling something "free"

The FTC's guide to the word "free" is short. Four clauses matter to a Shopify banner. Read them as guidance, not as legal advice.

You cannot claw the cost back through the purchase price. Section 251.1(b)(1) says the public understands that a "Free" offer is "based upon a regular price" for the item that must be bought, and that "a purchaser has a right to believe that the merchant will not directly and immediately recover, in whole or in part, the cost of the free merchandise or service by marking up the price of the article which must be purchased." For you this means do not raise the shirt from 38 to 42 dollars the week you start offering a free tote. The regular price has to be the price you actually charge.

"Regular price" has a definition. Under 251.1(b)(2), regular means the price at which you have "openly and actively sold" the product "in the most recent and regular course of business, for a reasonably substantial period of time, i.e., a 30-day period." The same paragraph says that for products whose price fluctuates, the regular price is the lowest price at which any substantial sales were made in that 30-day period. If you raised the price yesterday, the higher price is not yet your regular price.

Conditions go next to the offer. Section 251.1(c) says all terms, conditions and obligations should be "set forth clearly and conspicuously at the outset of the offer", and appear "in close conjunction with the offer". It adds that a footnote reached by an asterisk "is not regarded as making disclosure at the outset." On a store, that means "Free tote with orders of 75 dollars or more" belongs in the banner itself, not behind a link labeled "details".

Do not run the same "free" offer all year. Section 251.1(h) says a single size of a product or a single kind of service "should not be advertised with a 'Free' offer in a trade area for more than 6 months in any 12-month period", that "at least 30 days should elapse before another such offer is promoted in the same trade area", and that no more than three such offers should be made in the same area in a 12-month period. The paragraph is written around a single size of a product, so read it as a warning about treating a permanent "free gift" as a pricing strategy, not as a rule that fits every store line by line.

The guide also lists "Buy 1-Get 1 Free" among the wording it covers, and 251.1(a)(2) says such offers "must be made with extreme care". If that is the offer you are planning, read How to Create a BOGO Offer on Shopify before you write the banner.

The four common triggers

A trigger is the condition that makes the gift appear. Freebies Engine by Log Studio Lab has a template for each of the four common ones.

The template descriptions are short on purpose. "Free sample with purchase" gives every order a small free product. "Spend X, get a gift" gives a gift to shoppers who reach a cart value. "Buy X, get Y" gives a different product free when certain products are bought. "Gift tiers" adds more gifts in as many steps as you like.

What a gift costs you: landed cost, not retail value

The number that matters is what the gift costs you, delivered to your warehouse and boxed. Call it landed cost: the supplier price plus freight in, duties and any packaging you add. The tote that sells for 24 dollars on your site does not cost you 24 dollars to give away; it costs you what you paid for it.

Work one example with stated assumptions, not benchmarks. Assume a gift with a landed cost of 4 dollars and 1 dollar of extra packing and pick time, so the gift costs 5 dollars per order. Assume your products carry a 50 percent gross margin and the offer starts at a 60 dollar cart. A 60 dollar cart earns 30 dollars of gross margin, so the gift consumes about 17 percent of it. Raise the threshold to 80 dollars and the same gift takes 12.5 percent of 40 dollars of margin. Shipping, payment fees and returns come out of what is left, so check the result against your own numbers before you commit.

If the offer hands the gift to shoppers who would have bought anyway, the cost is real and the benefit is zero. Setting the threshold just above your current typical order is the usual way to aim at the shoppers who might stretch. Pull your own order history to find that number.

When a gift is the wrong tool

• Thin margins. If the products on qualifying carts earn little after shipping and fees, there is no room for a gift. A smaller discount or a shipping threshold costs less.
• A gift nobody wants. A leftover item shoppers ignore does not move the order.
• Gifts you cannot stock. Shopify's Buy X get Y help says free products need adequate inventory, and when the free product's inventory reaches zero it shows as sold out and customers cannot use the discount. A promise you cannot fulfill is worse than none.
• A permanent banner. An offer that never ends becomes the price, and the FTC clause above leans against running one all year. Shoppers also learn to wait for it.

How to run one on Shopify

Shopify's built-in way is a Buy X get Y discount with the free option. Shopify's Help Center says the customer buys the "X" items, the "Y" items receive the discount, and the discount can be a percentage, an amount off each, or free. It also says that with both code and automatic discounts, the free or discounted item is never added to the cart automatically: the shopper has to add the gift themselves.

If you want the gift to be added without the shopper doing anything, start from the Spend X, get a gift template in Freebies Engine by Log Studio Lab. It gives a gift to shoppers who reach a cart value, and you set the threshold from the math above. Write the banner so that the condition, the gift and the end date sit in the same sentence. Then compare the first week of orders with your gift cost before you extend the run. See the pricing page for plan requirements.

This is not legal advice; confirm the wording of any "free" offer with your own counsel.