In this post, I’d like to discuss how you should value your miles. Miles ARE a currency, but it can be hard to peg values on them because it depends on where you are going, which cabin (class) you want to fly in, and how you value each of these. But it’s important to consider how you personally value miles, because that really determines to what extent and expense you would be willing to go to while accumulating miles.
Valuing Miles for Domestic vs International Award Redemptions
Let’s start by looking at the cost of domestic coach class tickets vs. a domestic coach miles award. Note that there are many exceptions and variables in this, but I’ll try to make some generalizations for the sake of discussion. Whenever booking an award, it’s good to compare the price of the award ticket you’re booking vs. the number of miles that it costs, and make your decision based on that.
Let’s estimate that a domestic ticket typically costs $250-$500. It also normally costs roughly 25k to 50k miles to book a domestic ticket using miles. At this rate, I would say you can value miles at approximate 1 to 2 cents each for domestic ticket redemptions. Now, lets consider valuing miles for international flights. International coach class tickets range probably from $700-$2000. I am really generalizing on this one, because it obviously depends where you are, where you want to go, the dates you choose, etc., but let’s say it would be about 60-100k for a coach class international award. If you have the miles, I think you’re doing a bit better with international coach class tickets, but it can sometimes still work out to 1-2 cents a mile. However, consider business class or even first class redemptions. For these prices, you’re talking several thousand dollars and ranging up to tens of thousands. Yet, if you do your homework and pick the right redemptions, you generally never exceed about 150k miles for a one way ticket. In this case, your miles could be worth up to 10 cents apiece.
How should YOU value miles?
Obviously accumulating larger amounts of miles and putting it into upper class redemptions can you a lot of value in normally expensive seats. However, should you say your miles are all worth 10 cents apiece? No, for a couple of reasons.
The first is mainly that you don’t know if you’ll always be able to get an award ticket which values it at that level. It’s subject to availability, and you generally have to be pretty flexible if you want the best award redemption values.
The second, is more my personal take, but I think my perspective would apply to most people. Generally, if I travel out of pocket, I can only afford to (or at least choose) to travel coach. Yes the miles make upper class redemptions possible at fairly reasonable cost, but I would probably never ever purchase a $10,000 business class ticket, when I could fly in coach for $1500. That’s not to say I don’t enjoy business class and would never fly it with miles, but I don’t believe I can realistically say I value at miles at 10 cents per, because I would just choose not to fly business class otherwise. I think there’s some happy medium in there, and I believe that I can fairly value my miles in the neighborhood of 5 to 6 cents, balancing out the notion that I would not actually have booked business class tickets at the price they’re sold at, but I do enjoy the experience and comfort of getting to fly in it.
Use Your Miles and Points for Your Greatest Benefit
I would like to make one final point on this topic, which has been a hot topic of late in the frequent flyer community (most of the blogs in my blogroll have made posts about this topic in the past month). Ultimately, the most important thing is that you use your miles to do the things you value most. Yes, I and other bloggers will post about great business and first class experiences and such, and I generally pay for my domestic trips and save the miles for international trips. However, for some people they may not travel internationally, and/or they can’t afford to pay for domestic trips. For some people, having free domestic flights allows them to see family, relatives, and friends, that they might not otherwise be able to do. And using your miles for that is a perfectly legitimate use (not to insinuate that I had a right to tell anyone how to use them to begin with). The only caveat is to try and optimize the cost of your miles based on what you do with them.
We’ve put up an introductory post about churning credit cards, which is a way to generate miles for fractions of a cent (less than $0.01). Do check out this post, but consider that if you are able to generate RDM (redeemable miles) at such low cost, all your travel is essentially at little to no cost, whether you choose to book all your domestic travel with miles, or you book pricy premium class seats. Until next time!