How to use the points accrual cost calculator
A points programme has two different cost numbers. One is the accrued liability booked when a sale earns points, and the other is the redemption cost that actually reduces revenue when a customer spends those points. Reading the accrual rate alone and concluding that 2% of revenue is a cost overstates the real burden, because a meaningful share of issued points expires before anyone uses it.
This calculator therefore shows points accrued and estimated points redeemed separately, with the gap reported as points expiring unused. The revenue share is taken from the redeemed figure displayed on screen divided by revenue, so the numbers on screen reconcile exactly. Set the redemption rate to 100% and the accrued and redeemed amounts match, which makes the revenue share equal the accrual rate.
No industry average redemption rate is built in. Expiry depends on the earning unit, the validity period and any minimum redemption threshold, so the only figure worth using comes from your own past redemption and expiry data. Accounting treatment also varies, so follow your finance team's basis for the liability you actually book.
Frequently asked questions
Divide the value of points actually spent by the value accrued in the same cohort. Programmes with long validity periods only give a reliable figure once a full earning-to-expiry cycle has closed.
They answer different questions. The accrued amount drives the balance-sheet liability, while the redeemed amount is what actually erodes margin. For promotion profitability, the redeemed figure is closer to reality.