How do I calculate If I got a good deal for an award ticket....

Discussion in 'Newbies' started by Beachgirl07, Apr 29, 2015.  |  Print Topic

  1. Beachgirl07

    Beachgirl07 Silver Member

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    I know how to do it for a revenue ticket isn't it call cpm? How do I calculate for a award ticket?
    I have the spend amount for the ccard, points earned, and mileage for the ticket. Can you clarify this for me please.
     
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  2. WilliamQ

    WilliamQ Gold Member

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    This varies. What guides me with redemptions are do they get me what need (not want) at a cash equivalent which I wouldn't have paid. Unless you paid cash for your miles or points, they are in a way by-products of something you would have done with or without the rewards. In that context and the two basic question answered, it is easier to say if an award was worth it. There are always better deals but at what "costs" (aka sacrifice, compromise, inconvenience etc)
     
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  3. DTWBOB

    DTWBOB Silver Member

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    Many of use a one penny per mile rule -- i.e. if a tickee costs $300, using 30,000 miles is a breakeven.

    It also depends, of course, on whether you need to earn miles / segments to obtain/maintain elite status.

    DTWBOB
     
  4. Wandering Aramean
    Original Member

    Wandering Aramean Gold Member

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    If you're happy with the decision then you got good value. Playing by someone else's rules rarely ends well.

    That said, most folks look at some hybrid of the cost to acquire the points redeemed versus the cost of getting the trip done by paying cash outright. So if a trip is either $500 or $400 worth of points then you're probably better off "spending" $400 than $500. That doesn't take into account opportunity costs (earning more miles on a revenue ticket, less convenient travel dates/routing, etc.) but it is a good start. I shy away from looking solely at the cash price of the exact award booked because often there are comparable or acceptable options which would not price as full-fare seats, something which award tickets often look like when building them for more complex trips.

    It is also worth keeping in mind that most points do not inherently have a "value" so much as a cost to acquire. Because they cannot be freely exchanged on an open market they are a sunk cost once you have them. And they very, very, very rarely increase in value vis a vis better or more generous redemption options.
     
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  5. jamesb2147

    jamesb2147 Silver Member

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    It depends on the value you ascribe to the trip, which is something you have to figure out on your own, though I can share my methodology.

    Usually, I'll redeem for business or first class on long-haul international. However, I would *NEVER* pay what these would cost in cash. So, I generally use whatever the going rate is for discounted economy (what I would otherwise be willing to pay for a trip).

    Formula for CPM:
    CPM = ( [Cost of economy] - [Cash copay] ) / [Cost in points or miles]

    Let me know if you have any questions!
     

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