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Gift Cards vs. Paper Gift Certificates: Analysis of Potential Returns
Printer-friendly versionOver the last few weeks as ABA staff has spoken with booksellers about the new Book Sense electronic gift card program, a number of booksellers have asked the question: "In purely financial terms, how many more gift cards will I have to sell to achieve the same number of gross profit dollars as I would have selling paper gift certificates?"
To provide an answer to this question, ABA has prepared a three-year analysis of potential returns comparing paper gift certificate and electronic gift card sales.
The assumptions are:
- Figures are based upon gross year-one sales of $3,000 for gift certificates.
- There is a cost of $0.41 each for paper certificates.
- The costs for the electronic gift cards are those included in the financial analysis found at http://www.bookweb.org/read/6336.
- All cards and certificates are used.
- Set-up fees are included, but equipment costs are not.
Note: If the starting figure of $3,000 is not appropriate for your operation, we invite you to download this spreadsheet (Excel format), which will automatically calculate the comparison results based upon any gross sales amount that you supply.
Year 1:
|
|
Paper
|
Plastic
|
Plastic +5%
|
Plastic +10%
|
Plastic +15%
|
Plastic +20%
|
Plastic +25%
|
Plastic +30%
|
Plastic +35%
|
Plastic +40%
|
Plastic +45%
|
Plastic +50%
|
Plastic +55%
|
| $ sales |
3,000
|
3,000
|
3,150
|
3,300
|
3,450
|
3,600
|
3,750
|
3,900
|
4,050
|
4,200
|
4,350
|
4,500
|
4,650
|
| Program cost |
-49
|
-387
|
-394
|
-400
|
-406
|
-412
|
-418
|
-424
|
-430
|
-436
|
-442
|
-449
|
-455
|
| COG |
-1,830
|
-1,830
|
-1,922
|
-2,013
|
-2,105
|
-2,196
|
-2,288
|
-2,379
|
-2,471
|
-2,562
|
-2,654
|
-2,745
|
-2,837
|
| GP $ |
1,121
|
783
|
835
|
887
|
940
|
992
|
1,045
|
1,097
|
1,149
|
1,202
|
1,254
|
1,306
|
1,359
|
Year 2 (10% increase):
|
|
Paper
|
Plastic
|
Plastic +5%
|
Plastic +10%
|
Plastic +15%
|
Plastic +20%
|
Plastic +25%
|
Plastic +30%
|
Plastic +35%
|
Plastic +40%
|
Plastic +45%
|
Plastic +50%
|
Plastic +55%
|
| $ sales |
3,300
|
3,300
|
3,465
|
3,630
|
3,795
|
3,960
|
4,125
|
4,290
|
4,455
|
4,620
|
4,785
|
4,950
|
5,115
|
| Program cost |
-54
|
-375
|
-381
|
-388
|
-395
|
-402
|
-408
|
-415
|
-447
|
-453
|
-460
|
-467
|
-474
|
| COG |
-2,013
|
-2,013
|
-2,114
|
-2,214
|
-2,315
|
-2,416
|
-2,516
|
-2,617
|
-2,718
|
-2,818
|
-2,919
|
-3,020
|
-3,120
|
| GP $ |
1,233
|
912
|
970
|
1,028
|
1,085
|
1,143
|
1,200
|
1,258
|
1,291
|
1,348
|
1,406
|
1,464
|
1,521
|
Year 3 (10% increase):
|
|
Paper
|
Plastic
|
Plastic +5%
|
Plastic +10%
|
Plastic +15%
|
Plastic +20%
|
Plastic +25%
|
Plastic +30%
|
Plastic +35%
|
Plastic +40%
|
Plastic +45%
|
Plastic +50%
|
Plastic +55%
|
| $ sales |
3,630
|
3,630
|
3,812
|
3,993
|
4,175
|
4,356
|
4,538
|
4,719
|
4,901
|
5,082
|
5,264
|
5,445
|
5,627
|
| Program cost |
-60
|
-388
|
-396
|
-403
|
-410
|
-418
|
-425
|
-433
|
-465
|
-472
|
-480
|
-487
|
-495
|
| COG |
-2,214
|
-2,214
|
-2,325
|
-2,436
|
-2,546
|
-2,657
|
-2,768
|
-2,879
|
-2,989
|
-3,100
|
-3,211
|
-3,321
|
-3,432
|
| GP $ |
1,356
|
1,028
|
1,091
|
1,154
|
1,218
|
1,281
|
1,344
|
1,408
|
1,446
|
1,510
|
1,573
|
1,636
|
1,700
|