Referral reward calculator
How much can you afford to reward a referral? Start with customer economics, keep a profit reserve, then split the available budget.
Free to use. No signup. Calculations run in your browser.
Your reward budget
- Maximum combined reward cost per new customer
- 150
- Referrer portion
- 75
- Referred customer portion
- 75
- Gross profit before rewards and other costs
- 420
- Chosen gross profit reserve
- 210
This is a cost ceiling under your assumptions. Spending the full budget leaves your chosen reserve. A smaller reward keeps more contribution.
Money is shown in your currency, rounded to at most two decimal places; percentages to one decimal. Rounded parts may differ slightly from their total. Calculations use unrounded values. Estimates are scenario outputs, not forecasts or payout instructions.
Edit assumptions ↑Set a ceiling before choosing an offer
A reward that feels small next to revenue may consume most of the profit. This calculator starts with gross profit, subtracts other costs and a reserve, then assigns the remainder to rewards. It models one new customer over the revenue window you choose. It does not prove that the reward caused the acquisition.
The formula
- Gross profit = customer revenue × gross margin ÷ 100.
- Reserve = gross profit × reserve percentage ÷ 100.
- Combined reward ceiling = max(0, gross profit − reserve − other costs).
- Referrer portion = ceiling × referrer share ÷ 100. The referred customer receives the remainder.
If costs plus the reserve exceed gross profit, the output shows zero reward budget and the shortfall. Zero does not mean the original economics are healthy.
A worked example, not a benchmark
Suppose one customer produces 600 in revenue during your chosen window at a 70% gross margin. Gross profit is 420. Keeping half of that (210) and allowing 60 for other costs leaves a combined reward budget of 150. An equal split allows 75 of cost for the referrer and 75 for the referred customer.
Those numbers are the starting example above. They are not recommended margins, conversion rates or reward amounts. If revenue halves to 300 while other assumptions stay fixed, the combined budget drops to 45.
Count the economic cost once
Enter revenue and margin before referral incentives. If your reports already deduct referral discounts, reconstruct the pre-incentive amounts before using the reward ceiling. Use expected economic cost for credits, free months or service rewards, not an unsupported face value. Include payment fees and added support once, either in margin or other costs.
For subscriptions, use expected collected revenue in a fixed window after churn and refunds, not monthly price multiplied by an assumed lifetime. This model accepts nonnegative margin only; a product with negative gross margin has no positive reward budget under this method.
Turn the budget into a reward brief
Copy these fields into your program specification. Keep a cost buffer before using the full ceiling.
- Revenue window and source of margin assumptions.
- Qualifying action: the specific purchase or activation that earns a reward.
- Referrer offer, referred customer offer and estimated cost of each.
- Eligibility, reward caps, refund handling and fulfillment owner.
- How you will measure incremental customers against a comparison group.
Use the double-sided program template to turn that brief into an editable specification. Before setup, evaluate the whole program’s ROI with operating costs and incremental attribution. A profitable acquired customer does not guarantee a profitable program.
Method reference
Shopify’s guide to gross margin and gross profit explains the difference between revenue and gross profit. The reserve and split are your planning choices; the reward ceiling here is RefRef’s scenario arithmetic, not a sourced industry benchmark.