P&L Calculator

Overview

Loyalty programs are designed to create and capture the loyalty of customers. To achieve this, many modern programs are run as profit centres, providing greater clarity around the underlying economics.The On Point Loyalty P&L Calculator is a simple tool to generate an Income Statement for a loyalty program. By completing the required fields, you will be able to review the resulting Income Statement.

How to use the P&L Calculator

  • Complete all the fields by inputting the required information. For additional guidance, a description of each input variable is provided.
  • Generate the P&L for your program by clicking on the ‘Calculate Result’ button (make sure to accept the terms and conditions).
  • Once the P&L is generated, you can download a PDF version of the results by clicking the 'Download a PDF version' button.
  • You can make changes, and generate a revised P&L, by changing the inputs and re-clicking the ‘Calculate Result’ button. You may also erase all inputs by clicking the 'Clear Inputs' button.
INPUTSYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5
Points accrual and redemption
Points accumulated
Number of points issued during the year
Points redeemed
Points redeemed for the year

Revenues and Cost
Yield per point
Average selling price per point for each year (total selling price of points divided by points issued for the year)
Cost per point
Average cost per point for each year (total cost of awards divided by points redeemed for the year)
Implied margin

Breakage
Breakage rate
The estimated points sold which are not expected to be redeemed. Enter the breakage rate for the particular year as a percentage

Cost structure
Operating expenses (SG&A)
Enter the operating expenses for each year in the reporting currency

INCOME STATEMENT - ADJUSTED EBITDA BASIS

 YEAR 1YEAR 2YEAR 3YEAR 4YEAR 5
Gross billings (GB)
Gross proceeds from the sale of points
Cash revenue from points issued - Redemption bucket
Cash revenue from points issued - Breakage bucket
Cost of goods sold (COGS)
Costs from points redeemed

Gross profit
Operating expenses (SG&A)

EBITDA
Future redemption cost adjustment
Change in net points outstanding times average cost of rewards per mile for the period
Breakage re-evaluation

Adjusted EBITDA
EBITDA adjusted for certain factors particular to the business, such as changes in deferred revenue and Future Redemption Costs

INCOME STATEMENT - DEFERRED REVENUE RECOGNITION BASIS

 YEAR 1YEAR 2YEAR 3YEAR 4YEAR 5
Recognized revenue (RR)
Recognized revenue from points redeemed
Recognized revenue from expiry
Cost of goods sold (COGS)
Cost of rewards (consists of the cost to purchase airline seats or other products or services from redemption partners in order to deliver rewards chosen upon redemption of the points)
Costs from points redeemed

Gross profit
Operating expenses (SG&A)

EBITDA

Notes

Under the Deferred Revenue Recognition model, the proceeds from the sale of points are recognized proportionally to the extent to which the points have been redeemed or expired. This P&L Calculator assumes an expiry policy under which all remaining points will expire in Year 5. The On Point Loyalty full suite version of the tool offers the flexibility to adjust the logic for this and other parameters in accordance with your specific requirements.

Explore the full suite of On Point Loyalty Tools

This P&L Calculator is only designed to provide a simple snapshot. But with our full suite of financial planning and analysis tools, you will have the right solution to plan, track and optimize your program’s financial performance. The full suite not only includes a flexibly configurable P&L model, but also offers a comprehensive dashboard with a performance tracking functionality. In addition, the full suite offers a range of tools that will help you steer the performance of your program, including a cost per point module and a partner optimization model.

Find out more about our Financial Planning and Analysis tools for loyalty programs here.

P&L CALCULATOR