How many loyalty points should you give per dinar or riyal, and how does the math work?
Most local businesses set 1 point per unit of currency spent and price rewards so the redemption costs 5 to 10% of the spend needed to earn them — for example, a reward worth 5 dinars after 100 points earned on 100 dinars spent. The exact ratio matters less than knowing your breakage rate and reward cost before launching.
The three numbers that decide your points ratio
Before picking a points-per-currency ratio, know your average ticket, your gross margin per item, and how much reward cost you can absorb per visit. A café with a 60% margin can afford a more generous ratio than one with 25%, because the reward eats directly into what is left after cost of goods.
What "breakage" means and why it protects your margin
Breakage is the percentage of earned points that customers never redeem, because they forget, stop visiting, or the threshold feels too far away. Most loyalty programs see 20 to 40% breakage. This is not a flaw to fix; it is part of the model, and pricing rewards while accounting for breakage keeps the program profitable even when everyone theoretically could redeem.
A simple worked example
- Customer earns 1 point per dinar spent, needs 100 points for a reward
- Reward costs the business 5 dinars to fulfill (a free item, not a cash discount)
- Customer spends 100 dinars to earn the reward — reward cost is 5% of spend
- If 30% of customers never redeem (breakage), the real average cost per customer drops to about 3.5%
How to price rewards without guessing
- Price the reward at its cost to you, not its menu price — a free coffee that costs 0.80 dinars to make is a cheap reward even if it sells for 4
- Set the points threshold high enough that only genuinely repeat customers reach it
- Review redemption rates every quarter and adjust the threshold if redemption is too high or too low
- Never let a single reward redemption exceed what a customer typically spends to earn it
How Dawwerni lets you control this without a spreadsheet
On Dawwerni, points, thresholds, and reward costs are all configured per business, with anti-fraud limits that cap how often a customer can earn or redeem, and verified winning codes so a reward is only fulfilled once. This means the economics you set on day one — points per dinar, reward cost, breakage assumptions — stay protected as the program scales.
FAQ
How many points should I give per dinar or riyal spent?
A common starting point is 1 point per unit spent, with rewards priced so the total reward cost stays around 5 to 10% of the spend needed to earn it, adjusted for your margin.
What is breakage in a loyalty program?
Breakage is the share of earned points that customers never redeem. It typically runs 20 to 40% and should be factored into your reward pricing, since it lowers your real average cost per customer.
Should reward cost be based on menu price or actual cost?
Always use your actual cost to fulfill the reward, not its menu price — pricing based on menu price systematically overestimates how expensive your loyalty program really is.
Turn visits into reviews, repeat visits and sales
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