A loyalty program has two costs: the software that runs it and the rewards it hands out. Most price comparisons look only at the first, which is usually the smaller of the two. For a small business, a well-built program costs the software subscription plus 2.5% to 6.5% of what program members spend, depending on your margin. The full math is below.
How much does loyalty program software cost?
The market runs from free to several hundred dollars a month. Digital punch card apps start free with limits (customers, stamps or features) and their paid plans sit around $20 to $60 a month. Point-of-sale systems with a loyalty module charge for the whole system, typically $25 to $100 a month per terminal, and some price loyalty as a separate add-on. Loyalty platforms built for chains start at several hundred.
Rewa has two plans, both with unlimited customers: Basic at USD 39 a month for one location, and Pro at USD 79 for up to three locations plus manual notifications to your customers' wallets (reminders and promotions). For four to ten locations there is a custom plan. Every account starts with 14 days of Pro; if you do not pick a plan when it ends, the account pauses. There is no free plan.
One reference to calibrate any price: the software should cost less than what the program saves or earns you in a month. If a single customer recovered per month does not pay the subscription, the price is out of scale for your store.
How much do the rewards cost? (the number that matters)
Rewards come out of your gross margin, which is why the same discount is cheap for a coffee shop and expensive for a grocery store. Our rule so the program never eats the profit: budget at most 10% of gross margin, which, expressed on sales, gives these ceilings:
- 65% margin (coffee shop, barbershop, nail salon): up to 6.5% of sales.
- 45% margin (bakery, restaurant): up to 4.5% of sales.
- 25% margin (grocery, convenience store): up to 2.5% of sales.
In practice, a well-built program lands under those ceilings. Take a coffee shop: ten stamps, one per visit, and a free coffee as the reward. If the ticket is one coffee and it costs you a third of its price, you give one coffee for every ten sold and the reward costs 3.3% of what those customers spend. With a reward in product you pay the cost of goods and the customer gets the menu price. The digital loyalty card builder has example cards for coffee shops, bakeries, salons and barbershops.
The costs that appear on no price list
Counter time: a sign-up that takes 30 seconds per sale, in a store with 80 sales a day, is 40 minutes a day. Physical cards when the format needs them: printing, restocking, replacing the lost ones. And the biggest one: the permanent discount with no cap, which stops being noticed after a few weeks and is paid forever. A discount with no cap has an open-ended cost.
When does a loyalty program pay for itself?
Each extra visit from a customer leaves you the average ticket times your margin. The break-even math: divide the total monthly cost of the program (software plus rewards) by that profit per visit and you get the extra visits you need per month. With round numbers: if the program costs you the equivalent of 20 tickets a month and your margin is 45%, you need about 44 extra visits a month across all your regulars. With 100 customers in the program, that is one extra visit every two months per customer.
Run that math with your own numbers before you choose the reward. Then, in Rewa, the dashboard shows the visits, the customers who came back and the rewards redeemed for the period: create your account and check it against your numbers. If you are still choosing a tool, the guide on loyalty program software for a small business covers what to check first.