Is your referral program actually cheaper than paid?
Reward payouts feel free because nobody sees a media invoice. They're not — this prices the program against the acquisition channel you already measure.
Your numbers
Referred signups or purchases that actually converted, not clicks or invites sent.
What you pay out — cash, credit, or discount value — per successful referral.
Software subscription plus the time cost of running the program, for the same period as your referral count.
First-order value, or full LTV if you want the program's real long-run return rather than the conservative case.
Your current average cost to acquire a customer through paid channels.
Referral program ROI
+671%
$27000 in referred revenue against $3500 total program cost.
Cost per referred customer
$23.33
Reward payouts plus overhead, divided by successful referrals.
vs. blended CAC
$65.00
Referrals are cheaper
Net profit
$23500
Referred revenue minus total program cost — reward payouts plus overhead.
This program is both profitable and cheaper than your paid acquisition — at $23.33 per referred customer against $65.00 blended CAC, it's a genuinely underpriced channel worth funding harder before you scale paid spend further.
Use full customer LTV instead of first-order value if you want the program's real long-run return — referred customers frequently retain better than paid-acquired ones, which this conservative first-order view won't capture.
Calculated in your browser — nothing is sent anywhere, and nothing is stored.
The maths, so it isn't a black box.
It totals the real program cost
Reward payouts across every successful referral, plus platform subscription and admin overhead for the same period — the two costs that almost never appear on the same line when a referral program gets reported internally.
Divides by referred revenue
Successful referrals multiplied by revenue per referred customer, set against total cost, to produce a genuine ROI percentage rather than a vague sense that referrals are 'basically free.'
And prices it against your paid CAC
Cost per referred customer, benchmarked directly against blended CAC — the comparison that actually tells you whether to fund the program harder or fix it before scaling.
Questions about this calculation
First-order value gives the conservative, immediately defensible number. Full LTV gives the real long-run return — and referred customers frequently retain better than paid-acquired ones, so if you have reliable LTV data, use it; the conservative view will understate the program.
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Where we do this work
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