Points-per-dollar math: pricing your loyalty currency

TODO — Write the practical math piece.

Key beats:

• Three numbers that matter: cost per point, redemption rate, outstanding liability.
• Cost per point = reward value / points required to redeem. Always express as a percentage of AOV.
• Liability accumulates faster than people expect. Show a one-year projection at 200 orders/mo.
• Why 1pt/$1 with 100pts = $5 reward (5% effective discount) is the safe default for most categories.
• When to use higher-value points (subscription-heavy stores) vs lower-value (high-margin verticals like beauty).
• Expiry policy as a liability control — inactivity-based default.
• Worked example: store doing 500 orders/mo at $60 AOV with a 22% redemption rate, projected liability and margin impact over 12 months.