A major credit car company is launching a referral program, which gives an existing customer $50 for each new person he or she refers to the company (does not necessarily have to become a customer). The credit card company estimates that the average annual spending of a customer is $10,000, and the revenue for the credit card company would be 5% of the spending. The estimated marketing and operational costs for the referral program is $500,000 per year. It is estimated that 20% of the referrals end up as new customers. Use the following:

Expenses = Fixed + number of referrals*50

Revenue = 500*0.2*Number of referrals

Breakeven = Revenue - Expenses