How to value your Miles and Points?

It’s all about that bass. Base worth of your miles and points that is. Cents Per Mile or CPM is a commonly used term in this hobby, to describe value of redemption.  Simply put, the idea is to assign a $ value to miles and points to help compare with the cash price of that ticket or hotel. It enables you to decide if it’s worth using your miles or simply paying cash. When is it ok to buy a toaster using points? NEVER. Seriously, NEVER!! Hopefully the rest of this post can drive this point further.

Formula: CPM = ($ amount in cents) ÷ (# of Miles or Points)

Example 1: Toronto – Vancouver RT cost 25,000 AP miles + $185 taxes OR $700 all-in cash ticket (this cash ticket would have earned you 2000 AP miles).

CPM =  70000 ÷ 25000  = 2.8 Cents per Mile

OR if you want to account for taxes and potential miles you would have earned, CPM =   (70000 – 18500) ÷ (25000 – 2000) = 2.2 Cents Per Mile

Example 2: Ottawa  – San Diego RT cost 34,000 AP miles + $165 taxes OR $ 500 all-in cash ticket (this cash ticket would have earned you 2300 AP miles )

CPM =   50000 ÷ 34000  = 1.47 Cents per Mile

OR if you want to account for taxes and potential miles you would have earned, CPM =   (50000 – 16500) ÷ (34000 – 2300) = 1.05 Cents Per Mile

I value Aeroplan Miles at 1.9 Canadian Cents a Mile. So in Example 1 we get a far better value by using our points whereas Example 2 is clearly a bad redemption value, pay cash instead. As long as your CPM > 1.9, its worth redeeming in miles.

How did I come up with a value of  1.9 for Aeroplan miles? It’s a personal estimate based on several redemption factors that I use to make my calculations and decisions. There are no right or wrong valuations, just different perspectives. A simple online search will get you many variations in values for different programs. The key is to use same set of numbers to make the calculations while earning and redeeming. Below are my valuations for the programs I use regularly.  All valuations are in CAD Cents:

Airlines and Hotel Chains often sell miles and points outright to customers at various price points via promotions. These valuations and calculations can also help you decide if you should buy those miles or points. More on buying miles and points in the next few posts.

Take Away:

• Always do your calculations before buying or redeeming.
• Make sure the valuations and other price points in the calculations are same currency.
• Don’t hoard points or miles for over a year, they devalue over time just like money.
• Nothing is free, you EARN your miles and points. Buy experiences, not things. Say no to that Toaster 😉

What did you last redeem your points for?