Where the ceiling comes from
A rewards program is paid out of gross profit: what you keep from each sale after the cost of goods, your answer to “how much is left?” That's why the same 5% is cheap for a coffee shop keeping 65 cents on the dollar and heavy for a grocer keeping 20.
The rule in this calculator: the program should not take more than 10% of your gross profit. That's the ceiling. At a 45% margin, it's 4.5 cents of every dollar that customer spends. Up to 60% of the ceiling the calculator says Comfortable, from there to the ceiling At the edge, and above it Costly. That leaves you room to raise the reward later.
We picked that ceiling: above 10%, the program starts competing with rent and payroll. The calculator also checks how long the reward takes. Past eight weeks it says Too slow, even if the program is cheap.
How to read the extra visits
The “Extra visits that pay for it” line tells you whether the program can work. If it costs you $18 a month per customer and each visit earns you $9 of gross profit, you need that customer to come in twice more a month.
Most loyalty pitches quote a sales lift from someone else's study. This calculator goes the other way: it tells you how many visits you need, and you decide whether that customer has them to give. A coffee shop whose regular comes twice a week has room for one more. At a salon, with a visit every five weeks, that number has to be small.
If the number looks impossible, try a cheaper reward before making the card longer: more stamps also mean a longer wait.
Three common mistakes
The standing discount
Ten percent off every purchase costs you 10 cents on every dollar, every day, including from people who were buying anyway. A free coffee every tenth visit, at a coffee shop's 65% margin, costs about 3.5%: almost three times less, and the reward feels bigger.
The long card
Twenty stamps at a salon with a visit every five weeks is nearly two years. The card looks cheap because almost nobody finishes it, and the customer drops it by visit three. A target that works: the reward should land within four to eight weeks. If it takes longer, the calculator says Too slow.
The uncapped reward
Twenty percent off looks harmless until someone uses it on a $300 catering order. If you give a percentage, cap it per purchase, for example 20% off up to $10. The calculator has a field for it.
Three examples, worked out
Change the values above to see yours. The first one is what the calculator loads with.
Coffee shop
- $6 average sale, $65 or more margin, 8 visits a month. Ten-stamp card, one per visit, and a free $4 drink.
- The drink costs you $1.40 and the customer earns it every 5 weeks: $1.12 a month against $48 of spending, or 2.3%.
- Comfortable. The drink could be worth up to $6.50 and still fit. One extra visit every 3.5 months pays for it.
Bakery
- $9 average sale, $65 or more margin, 6 visits a month. Eight-stamp card, one per visit, and a free $9 box of cookies.
- The box costs you $3.15 and the customer earns it every 6 weeks: $2.36 a month against $54, or 4.4%.
- At the edge: comfortable stops at 3.9%. Ten stamps brings it to 3.5%, comfortable, with the reward every 7 weeks. The other fix is a reward worth up to $8.
Grocery store
- $20 average sale, $25 or less margin, 10 visits a month. One point per dollar and a 300-point reward: a $5 fruit basket.
- The basket costs you $3.75. The customer earns 200 points a month, so the reward lands every 7 weeks: $2.50 a month against $200, or 1.25%.
- Comfortable, with little room: the ceiling is 2.5% and the reward can be worth up to $6. A $15 basket for the same points would come to 3.75%: costly.
Questions
What margin do I use if I don't know mine?
Think per item: out of every $100 you charge, how much is left after what you paid for the goods. Food service usually keeps 60 to 70, a grocery 20 to 30, a salon 60 to 80 because most of it is time. If your bookkeeper gives you a cost of goods sold (COGS) percentage, your margin is 100 minus that. If you're torn between two buttons, pick the lower one.
Why ask for the item's price instead of my cost?
Because you know the price and almost nobody has the cost handy. The calculator works out the cost from your margin: a $4 drink at a 65% margin costs you $1.40. If you know your cost and want to use it, divide it by the share you don't keep: at a 65% margin, a $1.40 cost means entering $4 (1.40 divided by 0.35).
Does this work the same for points and stamps?
The math is the same; the earning differs. Stamps arrive every so many visits, points every so much spending. If you offer several rewards, run the cheapest one, because that's the one most people redeem.
What about rewards along the way?
Some cards give a small reward halfway, like a free cookie at stamp 5 of 10. Run it as its own five-stamp card, then add its percentage to the main card's. A Rewa card takes up to three rewards along the way.
What does Rewa cost?
Basic is $39 a month for one location and Pro is $79 for up to three, with a 14-day trial. That's separate from the program cost on this page, which is what you give back to the customer.
Do you store what I type?
No. The math runs in your browser and nothing is sent anywhere. If you tap “Build this card in Rewa”, your values go to signup so you don't type them twice.