Value of QFF points

[Nizar]

Got an email about a competition to win 500k points.

In the fine print they said that:

The notional total prize value is AU$4,428 as at 13 July 2013, based on the recommended retail value of the Qantas Frequent Flyer reward options that could be obtained by redeeming Qantas Points through the Qantas Frequent Flyer program.

I found this a bit strange as 500k points can be used for say:
*288k for a F redemption MEL-LAX return which would usually be worth anywhere from $13-17k, and then
*180k for a F redemption MEL-HKG return which would be worth around $7-10k.

Hardly a mathemetician myself but if I add that up it seems to be a tad more than $4500 lol.

Would it not be in QF's interest to show how 'valuable' their points are ?

 

[samh004]

I'm sure I'd heard the real value of the program (for them) is the FF Store, selling all sorts of non-flying items to those that haven't realised they can redeem flights or upgrades, or simply never need to. Those items are usually quite expensive, but probably have a comparatively low retail value, so they probably pick the product that makes them the most, instead of the product that makes them the least, not sure on the reasoning.

An example (and I'm bad at maths so if I'm way off, you know why) is if I bought some iTunes store cards. A $50 card is worth 7150 points. From 500k points I can get 69 with a little change left over. That's only equal to $3450 of value on iTunes.

 

[casanovawa]

If they put a high value on their points it might mean that the many millions of points held by QFF members looked like a large liability on their books that they owe members that might have some impact on their financials and blance sheets etc, so maybe they are more interested in a balance between demonstrating the points are of some value, but not to the extent of their recorded liabilities against assets or whatever... I'm no financial whiz who knows how these things are reflected in the books, but maybe it could explain it?? Obviously they have to choose some figure to give them...

 

[JohnM]

I'm no accountant, but aren't these sort of things like points on the books that may or may not be used called a contingent liability? Presumably there's a line between ascribing them too much and too little value because of that?

 

[harvyk]

You'll probably find that they looked at the least efficient method for using points and assigned a value based on that method to reduce the cost of the competition. In most states the fees you pay to run a competition are based on the total prize pool available to that state. By using a very low value they would have escaped paying fees full stop in some states and paying only a nominal fee in others.

This system of paying licensing fees for running competitions was certainly true when I ran a competition a couple of years ago (2008).

As a side note, with my own experiences running a competition, NSW was by far the most difficult state to organise a competition in, to the point I very nearly made NSW illegible to enter. (The cost of running the competition in NSW was nearly the same as the prize). Conversely WA was by far the easiest as they didn't require any paperwork, and Vic actually gave me guidance on what to do when I couldn't contact the winner.

 

[VMC73]

Once you take off the huge amount of tax etc you have to pay when using points it is probably about right!