The two costs
Ask what a loyalty program costs and you get a subscription price. It is accurate and close to irrelevant. The subscription is a line you can cancel. The reward is a rate promised on member revenue, and it grows with success.
Total monthly cost = software per month + (effective discount rate × qualifying revenue).
Qualifying revenue is member spend on eligible items, not all revenue. The rate is what the reward costs you divided by the spend needed to earn it.
Reversible
The subscription. Change plan or leave, and the line is gone next month.
Effectively permanent
The reward rate. A public threshold is a promise to everyone mid-card, so set one you can fund in a bad month.
A worked total-cost model
Three shops, one formula. Illustrative example — not a customer result: every input is a plausible assumption, not a measurement. Software is held at 29 US dollars in all three columns so the comparison isolates the reward.
| Line | Small café | Busy restaurant | Multi-site retail |
|---|---|---|---|
| Monthly revenue | $18,000 | $60,000 | $150,000 |
| Share from members (assumed) | 30% | 40% | 45% |
| Qualifying revenue | $5,400 | $24,000 | $67,500 |
| Effective discount rate (assumed) | 5% | 5% | 4% |
| Reward cost per month | $270 | $1,200 | $2,700 |
| Software per month | $29 | $29 | $29 |
| Total per month | $299 | $1,229 | $2,729 |
| Total as a share of revenue | 1.7% | 2.0% | 1.8% |
| Reward as a share of cost | 90% | 98% | 99% |
The last row is the point. Triple the subscription to $87 and the multi-site total moves from $2,729 to $2,787 — 0.04% of revenue. Move the rate one percentage point and it moves $675. Check the subscription in your economy, then go back to the rate.
Turning a threshold into a rate, and back
A stamp threshold is a discount rate in disguise: divide what the reward costs you by the spend needed to earn it. Take a ten-stamp card, an average qualifying purchase of $5.50, and a reward costing $1.30 in goods. Ten stamps require $55.00 of spend, so the rate is 1.30 ÷ 55.00 = 2.4%. Cost that same reward at its $5.50 menu value and it is 10%. Use cost of goods when the free item would not otherwise have been bought; use menu price when it displaces a real sale.
Run it backwards to set a threshold. Pick a rate you can fund — say 4% — and the spend needed is 1.30 ÷ 0.04 = $32.50, which at $5.50 a visit is 5.9 visits. Round to six stamps: $33.00 of spend, so 1.30 ÷ 33.00 = 3.9%. Points behave identically — one point per dollar with 100 points buying $5 off is a flat 5% — so points versus stamp cards is a clarity decision, not a cost one.
Breakage, and why not to budget on it
Breakage is the gap between rewards issued and redeemed. It is real, often large, and it makes a program look cheaper than the rule you wrote. Budgeting on it is still a mistake.
- An unredeemed reward is a customer who was not moved. The saving and the failure are one event counted twice.
- Breakage falls as the program improves, so a budget built on it breaks when things start working.
- Expiry rules and consumer law vary by jurisdiction, and depending on progress lapsing is awkward to explain when someone notices.
Budget at full redemption and treat breakage as variance in your favour. If most rewards go unclaimed, the threshold is too far away or the reward is not wanted.
How vendors price, and which model punishes growth
Four shapes dominate. Similar first-month figures can diverge sharply by month twelve.
| Model | You pay for | When the program works | Ask first |
|---|---|---|---|
| Flat monthly | Access, any volume | Cost per member falls; the bill holds | What is excluded and billed separately? |
| Per order | Each qualifying order | A second discount rate stacked on the first | Are refunded orders still billed? |
| Per member | List size | Enrolment becomes a cost centre | What counts as active, and who decides? |
| Usage tiers | A volume band | Flat until one good month crosses a step | Where are the boundaries? |
Per-order and per-member pricing punish growth: both take a cut of success, and per-member pricing argues against asking anyone to join. Rewardfinity charges a flat monthly fee, so what each plan includes is the thing to compare.
Purchasing-power pricing. Some vendors, including this one, index price to local purchasing power rather than converting a US figure at the spot rate — US $29, Canada CA$39, UK £24, Australia A$45, India ₹499, Nigeria ₦9,900, across 36 countries. US-dollar-only billing leaves a shop elsewhere carrying the exchange rate too.
Is it paying for itself?
What to look at, and the reading that most often fools people.
| Question | Evidence | A real yes | False positive |
|---|---|---|---|
| Are members visiting more? | Visits per member, before and after joining | That cohort's frequency rises | Members against non-members |
| Is member share growing? | Member revenue ÷ total, monthly | Share rises while the rate holds | A promotion or season running underneath |
| Does the real rate match the designed one? | Reward cost ÷ qualifying revenue | Measured rate sits near the set rate | A low rate caused by broken redemption |
| Is the enrolment ask still happening? | New members per staff member per week | The count holds in week ten | A launch spike read as a run rate |
| Is this the best use of the money? | Program cost against the same acquisition spend | Cost per repeat visit beats cost per new customer | Counting visits that would have happened anyway |
Questions owners ask about cost
How much does a loyalty program cost per month?
Two lines. Software is a fixed subscription — US $29 a month here, priced to local purchasing power elsewhere. The reward is a rate on member revenue. A shop turning over $18,000 monthly, 30% of it from members, at a 5% rate pays $270 in rewards against $29 in software.
Is a loyalty program worth it for a small business?
It depends on whether repeat visits are worth more than the rate you set. Do the arithmetic first: reward cost divided by the spend needed to earn it gives the rate, and that rate applies to member revenue permanently. If you cannot fund it in a bad month, the threshold is wrong.
How much should I spend on loyalty rewards?
Choose the rate first, then derive the threshold. If you can fund 4% and the reward costs $1.30 in goods, the spend needed is $32.50 — at $5.50 a visit, a six-stamp card. A reward that displaces a full-price sale should be costed at menu price instead.
Are there free loyalty programs for small businesses?
Free plans exist, including ours: up to 100 members, points plus one stamp card, one QR campaign. Free covers the software line only. The reward still costs what it costs, so a free plan removes about a tenth of a small shop's program spend and none of the real decision.
What is breakage in a loyalty program?
Breakage is the share of earned rewards never redeemed. It lowers true cost below the designed rate, which makes it tempting to budget on. Do not — an unredeemed reward is a customer the program failed to move, and breakage falls as reminders improve. Budget at full redemption.
Does loyalty software cost more in other countries?
It varies by vendor. Some quote one US figure and let the exchange rate decide what you pay. Rewardfinity indexes to local purchasing power across 36 countries — CA$39 in Canada, £24 in the UK, A$45 in Australia, ₹499 in India, ₦9,900 in Nigeria. Convert every quote into your own currency.
Set the rate before you pick the software.
The subscription is a line you can change next month. The threshold follows you.