Today's XKCD, in a round about way, has made me remember something I don't quite understand.

http://xkcd.com/870/

The middle panel is the one I mean, and the Alt Text... he mentions that he remembers the moment he understood that no one would spend money advertising something that was being given away for free.

So here's my question - what's the economics behind the buy one get one free (or buy two get one free)... are profit margins so high on products that you can give them away (and advertise that you are doing so)? I don't understand that.

Also, rather cooly, in the US if you buy something that's 2 for $10 and you buy one it's normally $5 not 6.79 like in the UK. Just saying.