Referral Revenue Calculator

Model the revenue a referral programme generates net of the incentives paid on both sides.

About Referral Revenue Calculator

Two-sided incentives are paid on both the referrer and the new customer, so the cost per acquisition is twice the per-side reward. That effective CAC is what should be compared against paid channels. Referral is usually the cheapest acquisition channel, but only once the double-sided incentive is counted properly against the orders it actually produced.

Formula

Referral Revenue

New customers = customers × referral rate × referral conversion rate

incentive per side: Reward paid to referrer and referee, so it is charged twice

Worked example

With the default values below, Referral Revenue Calculator returns Net Referral Revenue of $13,440.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Existing customersminimum 0: 8,000
Share who refer someoneaccepts 0–100 %: 8 %
Share of referrals who convertaccepts 0–100 %: 30 %
Average first order valueminimum 0: 110
Incentive paid per sideminimum 0: 20

Results

Net Referral Revenue: $13,440.00
New Customers Acquired: 192
Gross Referral Revenue: $21,120.00
Total Incentive Cost: $7,680.00
Effective Cost Per Acquisition: $40.00

Step by step

1Values used
2Referral Revenue
3Net Referral Revenue= 13,440.00
4New Customers Acquired= 192
5Gross Referral Revenue= 21,120.00
6Total Incentive Cost= 7,680.00
7Effective Cost Per Acquisition= 40.00

Assumptions and limits

The result is derived only from the 5 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Referral Revenue calculated?

New customers = customers × referral rate × referral conversion rate Two-sided incentives are paid on both the referrer and the new customer, so the cost per acquisition is twice the per-side reward. That effective CAC is what should be compared against paid channels.

Why does Referral Revenue matter?

Referral is usually the cheapest acquisition channel, but only once the double-sided incentive is counted properly against the orders it actually produced.

What values do I need to enter?

This calculator takes 5 inputs: Existing customers, Share who refer someone, Share of referrals who convert, Average first order value, Incentive paid per side. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.