The first question in every procurement conversation is what it costs. The honest answer has two halves that people tend to conflate: the platform fee, which is small and predictable, and the reward spend, which is entirely your decision and is where the real money is.
The Three Numbers
Finance will want these separated, and a platform that reports them as one figure is making your reconciliation harder for no reason.
| Number | Definition | Accounting view |
|---|---|---|
| Committed | Budget allocated to a team or period | A ceiling, not a cost |
| Issued | Points actually given to a person | The liability, and the accrual |
| Redeemed | Points converted into a reward | Cash out the door |
Committed minus issued is headroom you have not spent and will not be charged for. Issued minus redeemed is the outstanding balance sitting in staff accounts. That second figure is the one that surprises people at year end, so it is worth watching monthly rather than quarterly.
Per-Head Benchmarks
Rough ranges, per employee per year, for programs that are being used rather than merely being paid for:
| Program shape | Per head, per year | Notes |
|---|---|---|
| Discounts only, no points | $0 | Costs nothing but does not change behaviour |
| Light recognition | $40 – $80 | Peer kudos, small values, high frequency |
| Recognition plus milestones | $90 – $180 | The most common shape |
| Recognition plus incentives | $200 – $400 | Where sales or service outcomes are attached |
These are not prescriptions. A three-hundred-person retail business spending sixty dollars a head with high participation will get more out of it than one spending two hundred with a program nobody opens.
Why Frequency Beats Size
A hundred dollars a year, delivered as four twenty-five-dollar moments, does more than the same hundred dollars delivered once. This is not a subtle effect and it is the closest thing to a free lunch in program design.
People remember how often they were noticed, not how much the reward was worth.
The corollary is that a program with a high minimum redemption threshold undoes its own work. If it takes six months to accumulate enough points to redeem anything, the frequency advantage is gone.
The Breakage Trap
Breakage is the industry term for points that are issued and never redeemed. Some vendors will quote you a program cost net of expected breakage, which makes the number look attractive.
Do not budget on it. Two reasons.
- It is an accounting problem. Issued points are a liability whether or not they are redeemed. Assuming they will lapse does not remove them from the balance sheet until they actually do.
- It is a warning light, not a saving. High breakage means people are not redeeming, which means they are not engaged, which means the program is not doing the thing you bought it to do. A program with thirty per cent breakage is cheaper and worse.
What To Ask A Vendor
- Are we charged on committed points or issued points? The answer should be issued.
- What happens to unspent budget at period end? It should stay unspent, not convert to an invoice.
- Can we see committed, issued and redeemed as three separate figures, exportable?
- What is your average redemption rate across clients, and what counts as healthy?
- What is the minimum redemption threshold, and can we lower it?
A vendor who cannot answer the fourth question with a number is either not measuring it or does not want to tell you. Both are useful to know.
Want this modelled on your headcount?
Send us the team size and shape and we will send the numbers back.