Joyal Margin Guard

Before you give it away, know what it costs.

Loyalty rewards work — but only when the maths does. This isn't a rule to run "buy 10, get 1 free." It's a tool to find your own numbers: what a reward really costs you, and how much a customer should spend before you give one away. You set the threshold; it shows you the margin.

This is a guide, not a guarantee. Every business runs on different margins and overheads. Use it to sense-check your thinking, not to replace your own accounts.

1What are you giving away?

What's the item? The freebie you'll hand out. A café might pick a coffee; a wellness studio, a sauna session.

What do you charge for it? Its normal price on your menu, or what you charge for the service. e.g. a latte at €4.50.

2What does one cost you to make?

Your cost per unit Every cost of making one: ingredients, consumables, packaging, booking or payment fees. Not rent or permanent staff — you pay those whether the customer shows up or not.

Some costs are hard to pin down exactly — the heat and electricity for a sauna session, say. That's fine. Put in a fair average per customer rather than chasing a perfect figure.

3What a free reward really costs

The cost of a reward is almost never the number your customer feels. We measure the real one with a single figure — your Effective Discount Rate (EDR): what the free item costs you as a share of everything the customer spent to earn it.

Feels like 100% off. They collect a free coffee with nothing to pay — and that feeling is what keeps them coming back.

It's really 10% off. On a buy-9-get-10th-free card they pay for 9 coffees and walk out with 10 — ten cups for the price of nine, so they've had 10% off the lot.

To you it's under 4%. The free coffee only costs what you make it for, not what you sell it for. On a €5 latte costing €1.70, you've given away about 3.8% of what that customer spent. That 3.8% is your EDR.

EDR = cost of the free item ÷ what they spent to earn it × 100

Rough guide: under 8% is comfortable for most businesses, 8–14% is a real but workable cost, and above that you're giving away serious margin.

4Your numbers

Your Effective Discount Rate (EDR)

—

They feel: 100% off

Really to them: —

Actually costs you: —

Enter your numbers above to see your verdict.

5How much should they spend before the free one?

Compare the options and pick the threshold that fits your margins. Every figure is per customer who completes one full card.