Tools
Loyalty liability estimator
Estimate the balance sheet weight of your outstanding points. Enter points outstanding, your cost to serve one point and the share you expect never to be redeemed. The tool returns expected liability and the figure before any breakage assumption, so you can see how much of the estimate rests on that assumption.
The tool
The formula, in words
Expected redeemable points equal points outstanding multiplied by one minus your breakage rate. Expected liability equals those points multiplied by your cost to serve a point. The tool also shows liability with no breakage applied, because that is the number you carry if your assumption turns out to be wrong.
Why both figures appear
A breakage assumption is a forecast about customer behaviour, and it moves. Showing the unadjusted figure beside the adjusted one makes the size of the bet visible: if the gap between them is larger than your annual programme budget, the assumption is doing more work than the programme is.
Cost to serve, not face value
Use what a redeemed point actually costs your business to honour, including fulfilment and any partner settlement. Using face value overstates the liability for a self funded reward and understates it for one bought from a partner at a fixed rate.
Where it misleads
This is an estimate for planning, not an accounting treatment. Your auditors will have a view on recognition and on what evidence supports a breakage rate, and that view governs. Programmes with expiry rules also need the expiry schedule modelled over time, which a single snapshot cannot show.