Ever wondered how loyalty points translate into real rewards? Understanding this clearly helps you design a program that feels rewarding for customers and sustainable for the business. RewardsWP uses a simple and consistent valuation model, letting you focus on generosity and reward design instead of complicated math.
This guide explains how points convert to currency, how earning and redemption rates work, and how to calculate the cost behind your rewards.
What is a points conversion rate?
A points conversion rate defines the monetary relationship behind your points system. RewardsWP works with two conversion directions, each serving a different purpose in the loyalty cycle.
- Earning rate converts money into points when customers complete qualifying actions like purchases.
- Redemption rate converts points into reward value when customers exchange them for rewards.
These conversion directions always work together to shape both perceived value and reward cost.
| Conversion Type | Direction | Example |
| Earning Rate | Money → Points | Customer spends $1 → Earns 5 points |
| Redemption Rate | Points → Value | Customer redeems 500 points → Gets $5 off |
Together, these rates determine how valuable points feel to customers and how much each point costs your business.
Understanding Earning Rates
The earning rate controls how many points customers receive for their purchases. In RewardsWP, this is configured as points per dollar spent. When a customer completes a qualifying purchase, their points are calculated using this formula:
Points Earned = Order Total × Points Per Dollar
For example, with a rate of 5 points per $1:
| Order Total | Calculation | Points Earned |
| $20.00 | $20 × 5 | 100 points |
| $75.50 | $75.50 × 5 | 377 points |
| $150.00 | $150 × 5 | 750 points |
Points are rounded down to the nearest whole number. An order of $19.99 at 5 points per dollar would earn 99 points, not 100.
Fixed-Value Earning Actions
Some earning actions are not calculated from order totals and instead award a fixed number of points when approved or completed. These actions reward engagement moments that carry psychological or strategic value rather than direct currency math.
RewardsWP supports these fixed earning triggers:
| Action | Points awarded | Type |
|---|---|---|
| Make a purchase | Varies by order total | Calculated |
| Create an account | Fixed amount (example: 100) | Fixed |
| Write a product review | Fixed amount (example: 100) | Fixed |
| First order bonus | Fixed amount (example: 200) | Fixed |
Understanding Redemption Rates
The redemption rate controls how many points customers need to exchange for rewards. Each reward you create has its own points cost.
When you create a redemption reward, you set:
- Points required → how many points to spend
- Reward value → what benefit or coupon the customer receives
For example:
| Reward Type | Points Required | Reward Value |
|---|---|---|
| Fixed Discount | 500 points | $5 off |
| Fixed Discount | 1,000 points | $10 off |
| Percentage Discount | 1,000 points | 10% off |
| Free Shipping | 750 points | Free shipping |
Calculating cost per point
To understand what each point costs the business, RewardsWP uses this formula:
Cost Per Point = Reward Value ÷ Points Required
Examples based on reward configurations above:
| Reward | Calculation | Cost per point |
|---|---|---|
| 500 points for $5 | $5 ÷ 500 | $0.01 per point |
| 1,000 points for $10 | $10 ÷ 1,000 | $0.01 per point |
| Percentage discount reward | Varies by cart | Variable cost per point |
A consistent cost per point like $0.01 makes the program easy for customers to understand and easier for businesses to budget.
Calculating Points Value
Keeping track of your earning to redemption cycle helps you calculate the effective return percentage of your points program. Here is the formula RewardsWP follows to determine effective loyalty return:
Effective Discount = (Points Per Dollar × Cost Per Point) × 100
Example based on:
- Earning rate: 5 points per $1
- Redemption rate: 100 points = $1
- Cost per point = $0.01
Effective discount = (5 × $0.01) × 100 = 5%
A full earning to redemption cycle looks like:
| Step | Action | Points | Value |
|---|---|---|---|
| 1 | Customer spends $100 | +500 points | No reward applied yet |
| 2 | Customer views their balance in widget | 500 points | Stored for redemption |
| 3 | Customer redeems 500 points | 500 spent | $5 saved |
This means customers effectively receive $5 back on a $100 order, or 5% return.
Setting up your point rules
In RewardsWP, point value remains fixed and the experience is shaped through how customers earn points and what rewards cost. This keeps your program easy to manage while letting you decide how generous or aspirational it feels.
Configuring earning rates
The earning rate decides how fast a customer accumulates points when they complete a qualifying purchase. In RewardsWP, this is expressed as points per dollar spent. When you set this number in the Ways to Earn section, you’re telling the plugin how many points to assign for every dollar in the order total. To configure it, your path begins in the plugin’s settings area:
- Visit RewardsWP → Settings → Points
- Open Ways to Earn
- Enable the Make a purchase action
- Define the Points to award value
- Save your settings
The plugin immediately starts using this rate for future completed orders, ensuring every purchase follows the same earning logic you planned.
Configuring redemption rates
While earning rates shape accumulation, redemption rates shape motivation. Every reward in RewardsWP has its own points required and reward value, meaning you can build multiple redemption options at different levels to match your loyalty strategy. Configuring a reward is how you set what customers can get in return for their points, and the process again starts from the same Points settings hub:
- Visit RewardsWP → Settings → Points
- Open Ways to Redeem
- Use Add ways to redeem to create a redemption option
- Define the Points Required and the Discount Value
- Save the reward
From here, the plugin locks in that reward tier and begins displaying it to customers when their balance qualifies for redemption.
That’s it! RewardsWP keeps points simple to understand, predictable in value, and flexible in reward design. By using a fixed baseline where 1 point equals $0.01, and letting you configure how fast points are earned and what each reward costs, the plugin creates a loyalty system that works for both customers and businesses without confusion.
Once configured, points are earned, redeemed, and expired automatically in the background, creating a quiet but powerful retention engine for your store.