Every loyalty programme has a price. It is the earn rate, and it is set long before anyone calls it pricing. Somebody picks a round number that sounds generous, the deck gets approved, and three years later finance is carrying a liability nobody modelled.
A point is a promise to discount a future transaction. Issue enough of them and you have committed a percentage of next year’s revenue without running it past the person who owns the margin. That is a pricing decision, and it belongs in the same conversation as list price, trade terms and promotional depth.
Start from the margin, not the competitor
The most common way to set an earn rate is to look at what the brand across the road offers and match it. It feels safe and it is the fastest way to price a programme wrong, because their basket, their margin and their redemption mix are not yours.
Work the other way round. Take gross margin per category, decide what share of it you are willing to give back for an incremental visit, and let that number produce the earn rate. Most healthy programmes land between 1% and 3% of spend returned in value — but the range matters less than knowing which end of it you can afford.
Model it on your own baskets
Before anything goes live, run the proposed rules over twelve months of historic transactions. You will find out immediately whether your generous weekend multiplier costs you four figures or six, and whether the tier thresholds you picked put 3% of members in the top tier or 30%.
If you cannot simulate a rule change before you publish it, you are not pricing — you are guessing in public.
Simulation also settles arguments. When marketing wants triple points and finance wants none, a number from your own data ends the meeting faster than any opinion in the room.
Put one person in charge of the number
The programmes that stay healthy have a single commercial owner who signs off the earn rate and the reward mix — usually someone who already owns margin, not campaigns. They review the position quarterly, adjust the rate as costs move, and refuse the offers that do not pay back.
That governance is unglamorous, and it is the difference between a programme that compounds and one that quietly becomes an expensive habit.
We design and run loyalty programmes for restaurant groups, hotels, malls and retailers across the GCC. Everything here comes off live projects.
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