Miles Aren’t Free: How To Value What You Earn

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  1. BoardingArea

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    Figuring out how to value frequent flyer miles is tricky business. Most people have a vague concept of what a mile is worth to them, but if you press them on it, they don't really know how they arrived at that number. Worse yet, if you start to question them about how they earn or redeem miles, their past behavior is likely to tell a very different story. In Part 1 of this series, I showed how to calculate the redemption value for your award tickets so that you can start to think about what your redemption behavior says about how you value a mile. -- If you redeem 25,000 miles for a $500 domestic economy ticket, you redeemed your miles at 2 cents per mile (CPM) -- If you redeem 100,000 miles for a $4,000 international business class ticket, you would have gotten 4 CPM -- Neither of those redemptions is right or wrong, but they do tell us something about how you value miles. If you are willing to accept a 2 CPM redemption, then that must be the upper bound on your personal mileage valuation. Simply put, if you valued your miles higher than that, you wouldn't have redeemed that award and would have chosen to pay cash instead. But it could be lower than that. We just don't know yet. Now we need to think about establishing a lower bound. To do that, we'll look at the money and time you invest to acquire miles. But first we have to get past the notion that you got the miles for free. The post Miles Aren’t Free: How To Value What You Earn appeared first on One Mile at a Time.

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