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How do you value a point?

How do you value a point?

  • What it 'cost' you.

    Votes: 4 11.8%
  • What 'value' you can get out of it in cash or cash like form.

    Votes: 3 8.8%
  • What 'value' you can get out of it based on what you would pay

    Votes: 20 58.8%
  • What 'value' you can get out of it based on retail prices

    Votes: 7 20.6%

  • Total voters
    34
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ferni

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Everyone will have their own ideas, I'm interested in hearing them and why... (Poll included)

So I see 4 ways to value a point (could be CC, airline, hotel etc...)

1. What it 'cost' you. This cost could be based on earning it flying for work (ie $0) or it could be the cost of choosing to pay the 1% CC surcharge to get the points etc...
2. What 'value' you can get out of it in cash or cash like form. IE Cashback or easily liquidated gift cards (ie supermarket gift cards or prepaid CC)...
3. What 'value' you can get out of it for other products and services based on what you would spend for it. ie A Business class flight that you would pay $3,000 for (when it actually costs double that).
4. What 'value' you can get out of it based on retail prices. ie A First class flight that has a $10,000 retail value.

If I've missed any, let me know :)
 

harvyk

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6. The 'value' of the point is meaningless, the value is in the experience the point can buy.

So to expand on that, when I go to spend points, I'm not looking at what the points cost is, I'm concentrating on what I will personally get out of the experience. I will do something which has a higher points cost, but will bring me an experience I am after than attempting to squeeze "every last cent's" worth of value from my spend.
 
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deejo77

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I see points as bonus - if it doesn't cost me much I will incur cost to earn them....

Spending - as long as its higher then what I spent to earn them I am happy - I have burnt miles on Flights, acc, rental cars and gift cards - I am of the earn and burn thought school so you don't get burnt - the points are worthless if you can't get that J or F flight or worse the program changes or ceases. Of course I would rather burn on things of highest value but sometimes it just doesn't work that way.
 

JohnK

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I am addicted to hoarding points.

The value of each point is how much I think the redemption is worth and obviously leading on from that would be value for money.
 
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Awesom Andy

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I'm quite lazy and simple when it comes to points. For me, each point is worth 1 cent, so if it costs me more than 1c per point to obtain, I wouldn't be buying them. Likewise, if the redemption value is less than 1c per point (e.g. return Y tickets, toasters), I wouldn't redeem them in that case. Why I use 1 cent, you may ask? It's close enough and easiest to calculate. :)
 

dajop

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It all depends on the program of course. I have become so cynical about QFF, and the ever increasing surcharges and correlation between award availablity and paid fare, I now value a point at Woolies voucher price, or at best points + pay price. With SQ, I have achieved much better value, even in economy, due to scoring availability on relatively full and expensive flights.

But valuing points is somewhat subjective. As an example - recently I did use KF miles to fly SIN-SFO return in economy. At the time of booking there were basically three levels of commercial fares available - at the low end China Eastern and Air China, at the mid level ANA, JL & United and at the high end CX & SQ. Not that it mattered, as I was going to do the redemption anyway, but in valuing the points I would choose JL & ANA fares as reasonable substitutes - but not the MU/CA fares.

Likewise going from Australia, say in business class to Europe. I would value QF points, not on the QF commercial business class fare, but on the cost I could get a reasonably competive product for (include MH, EK, QR, TG but not including CZ or CA) or the cost of US Dividend Miles to get the same redemption seats.

Of course if earning through flying for work, then points are freebies, whichever way you look at it, so it only comes into play when comparing pts vs non pts earning fares or paying credit card surcharges and the like.
 

Jack3193

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I'm quite lazy and simple when it comes to points. For me, each point is worth 1 cent, so if it costs me more than 1c per point to obtain, I wouldn't be buying them. Likewise, if the redemption value is less than 1c per point (e.g. return Y tickets, toasters), I wouldn't redeem them in that case. Why I use 1 cent, you may ask? It's close enough and easiest to calculate. :)
I think 1c per point is way too low a value to place on them. You sometimes get more than 1c value per point even if you use them for Y redemptions. When used more sensibly, they can be worth many times that. For example a J rtn from MEL-EU with SQ for 161,000 points + $800 (instead of $9,000+) makes points worth over 5c each.
 

Awesom Andy

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I think 1c per point is way too low a value to place on them. You sometimes get more than 1c value per point even if you use them for Y redemptions. When used more sensibly, they can be worth many times that. For example a J rtn from MEL-EU with SQ for 161,000 points + $800 (instead of $9,000+) makes points worth over 5c each.
I think of it more in the finance terms, where the "time value of money/points" need to be taken into account as well. Instead of getting cash/vouchers now, the points need to sit there until I decide to take a flight, when there is availability - which can be 3 weeks, 3 months, or 3 years. Then there is also the opportunity cost where using points generally means it's not possible to earn points/status for the flights (11 days left to make a MASA booking). And as I'm SIN based, cash fares can be substantially lower (with SQ flights being the exception).

Not saying anyone is wrong, but that was my thought process. :)
 

dajop

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When used more sensibly, they can be worth many times that. For example a J rtn from MEL-EU with SQ for 161,000 points + $800 (instead of $9,000+) makes points worth over 5c each.
That is fine if you would be willing to pay $9000 return to get to Europe. But if you don't or wouldn't then it's hard to ascribe this value to them. i.e if you would be just as happy on a carrier that has lie flat seating that is reasonable quality and only costing $5-6000, then I'd consider value to be lower.
 
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desiredusername

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At my local Safeway in the US, I get a cash discount especially on Safeway Club items. Here, I get QFF points. Cash is better and cash is getting better. Of course if it was Virgin points with the better value seats, that'd be better value imo.
 

nonpop

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For J seating long haul, we work on ... if we book far enough in advance / take advantage of sale pricing and are fine with moving between BFOD pricing (within Tier 1 carriers), then what would be pay normally. This then becomes our value position when reviewing points.

We then say ... ok we'd be prepared to pay the absolute cheapest, scummiest, worst carrier on the planet mega discount Y pricing ... and convert that to taxes / fines ... then that becomes our co-payment.

We crush the two together and we come up with our magic numbers.

The net objective is to always get points for 'free'. if we need to pay for points, then we reduce the point value by a nominal amount subject to cost of acquisition.

For a Tier 1 carrier, we find the value comes through at about 5 cents a point.

However; always in the back of my mind is the fire sale where if we needed to unload them quickly via vouchers, the nominal value is about 1 cent a point. So having the balance of points in the bank and spending is paramount as points don't earn interest or any real money. they only 'save' you money if you need to use them. Always better to not spend it vs trying to reduce the outlay if you do need to spend.

This is our own rough guide only.

NB: If you book far in advance, in theory you need to take into account lost earnings on the dollars spent on the fare / co-payment.
 

Buzzard

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Points cost me anywhere from zero to 1c ea. I rarely pay more than 1c for them. Redemption value can vary wildly so is hard to put a value on.
 

serfty

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I don't quite agree. Yes they can be devalued but they are still worth something.
If not redeemed then there's no material value.

There may be some brag value as in "I have 200000 points", or more pertinently, something like "When Ansett went under I lost 450000 points".
 

JohnK

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There may be some brag value as in "I have 200000 points", or more pertinently, something like "When Ansett went under I lost 450000 points".
You are making the assumption they will go under like Ansett?
 

ferni

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If not redeemed then there's no material value.

There may be some brag value as in "I have 200000 points", or more pertinently, something like "When Ansett went under I lost 450000 points".
Reminds me of something my Dad says "Money isn't worth anything until you spend it" :)
 

burmans

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If not redeemed then there's no material value.

There may be some brag value as in "I have 200000 points", or more pertinently, something like "When Ansett went under I lost 450000 points".
The fact that you have not redeemed yet does not mean you never will. If you used this logic money in your bank account has no value until you use it, I suspect most would not agree with this.
 

serfty

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The fact that you have not redeemed yet does not mean you never will. If you used this logic money in your bank account has no value until you use it, I suspect most would not agree with this.
But how many should one save before using or "for a rainy day".

100K? 400K?

Sure you can have a target figure, say 560K for that ATW business class trip of a lifetime .

Note that points are not $$$, their value can be varied at the whim of the programme.

Once upon a time I could book (and did) MEL-PER-BME-ASP-AQY-ASP-CNE-BNE-MEL for myself and SWMBO on QF in Business class over three weeks for 37,500 points and $0 in +++ each.
 
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