How Much Does a Loyalty Program Cost for a Small Business?

Before you start a loyalty scheme it's sensible to ask: how much does a loyalty program cost? The honest answer is "less than you might think", as long as you avoid a few common traps. Here's every cost to plan for, and how to keep each one low.

The four costs of any loyalty scheme

1. Software (or printing, for paper cards)
2. Rewards: the free items or discounts you give away
3. Time: setting up and running it day to day
4. Hidden costs: fees, hardware and fraud

1. Software costs

Loyalty software for small businesses usually comes in one of these pricing models:

Pricing model	How it works	Watch out for
Free tier	No monthly fee	Member caps, adverts, limited features
Flat monthly fee	One price, unlimited use	Make sure "unlimited" really is
Per member	Price rises with members	Success costs you more
Per transaction	Fee on each stamp or reward	Unpredictable bills
Enterprise	Custom quote, contracts	Built for chains, not single shops

For an independent shop, a flat monthly fee is usually the best value and the easiest to budget for. StampOwl costs £19 a month (or £190 a year) for one shop, with unlimited members and stamps. The Premium plan, with animated collection cards, is £29 a month. Extra branches are £10 a month each.

2. Reward costs

Your rewards are the biggest ongoing cost, and the one you control most. Work it out per reward:

• What does the reward cost you? Use the cost price, not the menu price. A free coffee might cost well under a pound in ingredients and cup.
• How many paid purchases earn it? For "buy 9, get the 10th free", that cost is spread across ten visits.
• What extra visits does it encourage? That's the return on the investment.

Tips to keep reward costs sensible:

• Reward with items that have good margins (drinks, sides, add-ons).
• Prefer free upgrades or add-ons for service businesses.
• Use spend-based rewards if your prices vary a lot, so the reward scales with what customers spend.

3. Time costs

A good scheme should take minutes to set up and seconds per customer:

• Set-up: around five minutes with a browser-based card. See how to set up a loyalty scheme.
• At the till: one scan per stamp.
• Admin: none day to day. Glance at your dashboard weekly.

If a system needs training sessions, a sales call or a special device, the time cost rises quickly.

4. Hidden costs

• Hardware. Some systems need tablets or card readers. Browser-based scanners use your existing phone.
• Set-up fees and contracts. Look for no set-up fee and the freedom to cancel any time.
• Printing, if you use paper: reprints whenever you change your offer.
• Fraud, if you use paper: faked stamps mean free products you never meant to give away. See how to stop loyalty card fraud.
• App development, if you go for your own branded app: often far more than a small shop needs.

Paper vs digital: the real cost

Paper looks almost free, but add up reprints, lost cards and faked stamps over a year and a low-cost digital card often comes out ahead. It also shows you whether the scheme is working. Our paper vs digital comparison goes into detail.

A simple budget for a small shop

For a typical café, takeaway or barber:

• Software: £19 a month, flat
• Rewards: the cost price of one item per completed card
• Printing: a QR poster on your own printer
• Hardware: none, just the shop phone

Try before you commit

The best way to find out what a loyalty program is worth to your business is to run one with real customers. StampOwl gives you 30 days free on either plan, with no card details needed, so you can see the members and repeat visits for yourself before paying a penny. For ways to keep costs even lower, read cheap loyalty schemes for small businesses.