Why the pricing model behind your recognition marketplace matters

When organisations evaluate a rewards marketplace, the conversation often starts with size. How many countries can you serve? How many items do you offer?

Those are important questions. But I believe there is a more important one:

How much of my recognition budget will actually reach my employees?

I saw the importance of this firsthand when I was evaluating recognition platforms as a practitioner.

At the time, we were paying significant markups on service anniversary awards, in some cases close to 200%, along with excessive costs to ship items globally from centralised warehouses. Employees were choosing from curated catalogues where some merchandise was already a generation or two behind what they could buy themselves.

Our employees wanted something different. They wanted choice. They wanted relevant options in their local markets. And we wanted more of every pound we invested in recognition to actually reach them.

That experience fundamentally changed the way I think about a rewards marketplace.

The goal should not simply be to offer more things. It should be to give employees meaningful choice while maximising the value of every recognition pound you invest.

That is why the model behind Awardco's Global Marketplace matters.

Why PEPY pricing changes the equation

Awardco's pricing model has a simple structural difference at its core. The platform operates on a per employee per year, or PEPY, licence fee that is separate from the rewards budget itself.

That separation matters.

Your software cost is predictable. It does not increase simply because employees recognise more often, receive more awards, or redeem more of their points. Awardco does not build its margin into the rewards your employees choose. The software fee is the software fee. The rewards budget is the rewards budget.

That is fundamentally different from models where vendor revenue is tied to reward spend through merchandise markups, gift card markups, transaction fees, or other costs. In those models, the more employees redeem, the more the organisation may pay.

With PEPY, you have a more predictable cost structure and can encourage recognition and redemption without worrying that greater programme adoption will drive additional vendor costs.

More importantly, more of your recognition investment reaches the people it was intended for.

Bringing the employee shopping experience into recognition

One of the things that stood out to me when we evaluated Awardco was how closely the redemption experience could mirror the way employees already shop in their personal lives.

Think about your own shopping experience. You expect current products, competitive pricing, choice, convenience, free or low-cost shipping, and transparency.

Why should an employee expect anything less when redeeming an award from their company?

Real time merchandise pricing

Through marketplace options such as Amazon and Best Buy, employees can access merchandise based on current market pricing rather than relying solely on a traditional static rewards catalog.

On Amazon, for example, pricing is pulled from Amazon at the time of purchase. If an item happens to be on a limited time lightning deal, that lower price is reflected in real time on the Awardco platform. 

Compare that with an industry average markup on merchandise of approximately 88%. That means an employee may need to use significantly more of their award value to redeem the same item they could purchase elsewhere for less.

For example, Apple AirPods Pro 3 have a list price of $249 but are currently 20% off on Amazon, for $199. With Awardco, your employee redeems 199 points or $199, not the list price or a marked-up price. If the item has an additional Prime Day discount, your employee sees that discount in real time through our direct integration. The redemption experience mirrors their personal shopping experience.

Gift cards, including premium brands

Gift cards are another area where the pricing model really matters.

Some rewards providers add markups to gift cards, particularly the premium, most sought after brands where employee demand tends to be highest.

Awardco does not.

There is no premium tier or additional markup simply because an employee chooses a more desirable brand. With Awardco, a gift card valued at $30 costs exactly $30, or 30 points. Many premium gift cards also have no minimum redemption amount, giving employees the flexibility to redeem as little as $1.

That distinction is important. Employees should not receive less purchasing power simply because they choose a popular brand.

In a very small number of markets, certain gift cards may carry a fee established by the card issuer itself. Awardco does not add margin on top of that fee. Clients can choose whether to make those cards available and whether the organization or employee covers the pass through cost. Either way, the cost is visible.

That is the principle that matters: no hidden margin between what you intended to give and what your employee actually receives.

No transaction fees based on spend

Transaction fees are another cost that can be easy to overlook during a vendor evaluation.

Many legacy providers charge fees when points are issued or redeemed, often in the range of 10 to 15%. Those fees can scale directly with program activity.

Think about what that means for your recognition strategy.

You invest in communications, manager activation, champion networks, and other strategies to increase participation. Your program works. More employees recognize. More employees redeem.

And your vendor fees increase because your program became more successful.

Awardco does not charge transaction fees on the issuance or redemption of company funded points.

This is another reason the PEPY model matters. Your platform cost is established separately from your rewards spend, giving you greater predictability as your program grows.

You should be able to encourage employees to use the recognition program without worrying about the additional transaction cost every time they do.

One point can actually mean one dollar

Awardco gives organizations flexibility in how they structure point values, but we typically recommend keeping it simple:

1 point = $1.

Why?

Because it creates transparency.

Employees should not have to do math to understand what an award is worth and an organization should not need a complicated conversion model to understand where their recognition dollars are going.

If an employee receives 50 points, they know what those 50 points represent.

Look Beyond the Marketplace

The marketplace and the products offered are only part of the story. 

What matters just as much is the model behind it: how rewards are priced, where fees show up, what happens to unused funds, and ultimately how much of your investment reaches your employees.

Having sat on the practitioner side of this evaluation, I know these details are not always obvious when you are comparing providers. But they can have a significant impact on both the employee experience and the true cost of your program.

So as you evaluate a rewards marketplace, look beyond the number of countries, brands, or redemption options. Ask questions that help you understand how the marketplace actually works:

• How do you make money on rewards? Is your revenue coming from the software, the rewards, or both?
• Do you mark up merchandise or gift cards? Specifically ask about premium gift cards and compare real merchandise against current retail prices.
• Are there transaction fees when points are issued or redeemed? How do those costs change as participation and redemption grow?
• What happens to unredeemed points? If an employee leaves or your contract ends, who owns that value?
• How are pricing and shipping handled? Are employees receiving current market pricing, and what additional fulfillment or international shipping costs apply?
• How much meaningful choice do employees really have? Consider merchandise, gift cards, travel, experiences, charitable giving, global availability, and whether the marketplace can evolve with your workforce.

The answers to these questions will tell you much more about the value of a marketplace than the size of the catalog alone. Ultimately, the question is not just how much you are investing in recognition. 

It is how much value your employees receive from that investment.

Final thoughts

Every pound spent on recognition represents an intentional investment in your people.

Employees should feel the value of that investment.

For me, that is the real measure of a rewards marketplace. Not simply how many options it offers, but how much choice, value, and transparency employees experience when they receive recognition.

I have sat on the practitioner side of this decision. I have seen what happens when significant portions of a recognition budget are absorbed by merchandise markups, shipping costs, and other fees. And I have seen employees presented with a catalogue that did not reflect the way they wanted to shop or the choices available to them in their everyday lives.

There is a better way to think about it.

When your platform costs are predictable, your rewards budget is protected from unnecessary margin, and employees have the freedom to choose something meaningful to them, more of your investment can reach the people it was intended for.

So as you evaluate the market, look beyond the size of the catalogue.

Ask where the money goes, what your employees actually receive, and how much of every recognition pound truly reaches your people.

A message from Awardco

Awardco is built so more of your recognition budget reaches your employees. Trusted by 3,000+ organisations worldwide, Awardco helps organisations:

• Offer rewards with fulfilment in 163+ countries
• Give employees access to hundreds of millions of reward options through partners such as Amazon Business, Priceline, and Viator
• Build custom catalogues and Smart Award Networks with independent budgets, custom permissions, and localised control
• Expand employee choice through merchandise, gift cards, experiences, charitable giving, company swag, and other redemption options
• Give employees additional flexibility through options such as purchasing points, cash out, and A-Pay™