Stop telling me that “value” is what I would have been willing to pay


Nick recently wrote a couple of posts where he argued that Chase Ultimate Rewards points “ain’t all that” (here and here).  As I thought about writing a rebuttal, my mind kept drifting back to the need to correct a common misconception.  It’s difficult to debate the value of points without first agreeing with the meaning of “value.”  Commenters, bloggers, podcasters, whateverers often claim that the true value of an award is not the cash price of that exact flight or hotel or cruise, but rather the cash amount you would have been willing to pay if you had paid cash.  That’s wrong.  Wait, wait, wait!  Before you raise your hackles (it’s been a minute since I’ve used that term!) let me explain that your concept is right, but you’re using the wrong word.  The correct word is “savings.”  When you spend 100,000 points to fly international first class, your savings are correctly accounted for by the amount you would have otherwise paid for a flight.  Let’s say that you would have been willing to spend $1,500 on an international flight if you hadn’t found that 100K first class award.  It is absolutely correct to say that your 100K points resulted in saving $1,500.  Boom.  Done.  No argument from me.  But if you try to claim that the value of the first class flight was only $1,500, I vehemently disagree.  My hackles are raised.

A long, long time ago, my favorite angel of darkness, The Devil’s Advocate, made the same argument that I’m bringing to you today.  In that post, he imagined a scenario where it would have been possible to buy a brand new Porsche with a million Delta SkyMiles.  Sure, he wrote, you might have only been willing to pay for a Hyundai, but: “You didn’t get a Hyundai. You got a Porsche.”  Exactly.  Returning to the term “savings,” you saved the $20,000 (or whatever) that you would have spent on your Hyundai, but what you got was much more valuable.  The same is true when you use miles to fly first class.  You might not have been willing to pay cash for first class, but you still got first class value.

Let’s now dial this down to a much more realistic everyday example.  Let’s say that you’re looking to fly economy from Detroit to Miami and you found the following nonstop flights that work with your schedule.  Both prices are for regular economy, not basic economy:

  • AA departs at 6am: $299
  • Delta departs at 8:30am: $484

You don’t really want to have to wake up at 3am to catch that 6am AA flight, but you figure that the savings are worth it.  Then you do an award search and find that you could use your Delta miles for the preferred 8:30am flight:

As you can see above, a Delta cardholder can pay 32,300 miles + $6 (really $5.60) for the Delta flight.  My argument is that those 32,300 miles plus ~$6 result in $484 in value, but only $299 in savings.  The value per Delta mile is 1.5 cents per mile, but the savings per Delta mile is only 0.9 cents per mile.

I can imagine people arguing that they don’t personally value that Delta flight at $484.  Well, OK, but now you’re getting into a whole different ball of wax where you’re talking about subjective value (alternatively, let’s go with a “ball of yarn” for those cats to play with).  If you want to argue that the subjective value of your Delta miles are less than 1.5 then go for it.  But then keep in mind that cash would also have a subjective value.  For example, maybe you don’t have any miles and so you might pay for the $484 flight with cash because you really can’t stand the thought of getting up too early.  In that case, you might declare that the flight was subjectively worth only $300 to you.  But then you would be indirectly making the argument that your dollars are worth less than dollars.  That doesn’t make sense.  For this reason, I don’t see a place for subjective value when arguing about the value of points.

When talking about objective value, there’s simply no better way to objectively value something than to see what that thing is actually selling for.  There are reasons that Delta can sell that flight for more than AA does for theirs: Delta’s flight is at a better time, Delta is more reliable, Detroit flyers are more likely to be loyal to Delta, etc.  But ultimately, those reasons don’t matter.  The objective value of that flight is the amount that Delta sells it for.  Full stop.

As an aside, basing the value of an award on the cash price often undervalues your award a bit because the award is often fully refundable whereas the cash ticket usually is not.  For example, with a Delta award flight originating in North America, you can cancel it and get all of your miles and fees back.  With a paid flight, you’ll get back a credit which expires in a year.  That’s not as good.  On the flip side, the paid flights earn miles whereas the award flights do not, so you can either decide that these two issues cancel each other out or account for the loss of earned miles when figuring out the value of your miles.


When comparing the value you got from your points and miles to the objective value, I recommend following these guidelines:

  • Record the cash price at the time of booking.  If you booked a flight six months ago with airline miles and just the day before your flight think to look up the cash price, you’re very likely to see a much higher price than you would have paid back when you booked your award.
  • For one-way flight awards, record the round-trip airfare and divide by two.  Sometimes prices for one-way flights (especially international flights) are much higher than half the round-trip price.  The same isn’t usually true when using airline miles (but it is sometimes true with Delta miles, FYI).
  • With hotel and miscellaneous other awards, make sure to find the best available cash rate.  For example, when booking a SLH property through Hyatt, Hyatt sometimes charges more than if you book directly with the SLH property.  The lowest available rate is usually a better measure of value.  I say “usually” because sometimes the lower rate doesn’t come with benefits that you would get when using points.  For example, when booking an SLH property with Hyatt points, you’ll earn Hyatt elite qualifying nights for your stay.  If that matters to you then the price for booking through Hyatt may be the better choice for assigning value.

Let the objections begin…

I eagerly anticipate fierce objections to my arguments.  Please comment below…

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“Value is not intrinsic, it is not in things. It is within us; it is the way in which man reacts to the conditions of his environment. Neither is value in words and doctrines, it is reflected in human conduct. It is not what a man or groups of men say about value that counts, but how they act.”—Mises

Points and Miles Doc

Love this article! And I totally buy your discussion.

“It’s not worth this because I only value it this much” completely negates the fact that things simply don’t cost what you value them at. Sure I’d love to value a first class flight on Emirates at $500, but that’s not reality. I might only value gas at $1.50/gallon but it doesn’t matter, or eggs, or whatever it is – it costs what it costs.

It also overlooks the fact that someone may not be willing to take the cheapest equivalent flight. My vacations are limited, and I want to be comfortable when traveling. If an economy long haul flight to get somewhere is $500, I would never pay $500 because I’m simply not going to take an economy long haul flight. I value that at zero because I won’t do it. So again we look to the cost of the flight I actually took as the comparator, not the cheapest alternative with 14 connections. 😉

Great post!

[…] in line with its actual value to you. That is the most important factor in weighing this decision. (This article explores the savings vs value debate much more fully than I am capable […]


As an economist, I love to debate things like this, but I think this ongoing argument is overcomplicating things.

If in a world without points, I’d have booked the exact same thing for cash, I put down the cash price. For things more extravagant or convenient than I would normally pay for in cash, I determine what I would pay over the cheaper alternative I would have booked in a pointless world to make me indifferent to the cheaper option. Done.

Only using retail price and claiming your United miles are worth 5 cents each falsely equates price with value/benefit, while separating savings vs value perhaps helps illustrate the concept, but seems to add effort without adding informational value.


Great article to spark discussion!

Though I’m not sure I would agree with your point on value. Take your Porsche example. If, say, someone was gifted a Porsche that had a sticker price of $100k. Did he receive $100k of value? Maybe. But it would depend. Assuming he would be able to sell/liquidate it for $100k then, yes, he definitely received $100k in value. If the terms of the gift required him to retain the car without any option to resell it, then I would argue that in some cases he would not have received $100k of value. If he recently bought a Bugatti and and has no use for a Porsche, and would leave that Porsche sitting in his garage, with no option of selling it, I would argue he received much less than $100k of value, and potentially even zero or negative value.

Value is relative, and depends on the individual receiving that value. An other way to conceptualize it is in terms of the stock market and corporate acquisitions: why is Company A willing to pay more (than Company B) to acquire Company C, assuming they both have deep pockets? Simply put, because the value of Company C is greater to Company A than it is to Company B. Value depends on a discount rate that varies from person to person (or company to company).

Last edited 7 months ago by efrant

I can’t agree with any argument that would result in the Amex Platinum Equinox credit being a “$300 value”.


Let’s suppose a one-way business class ticket to Australia is 100,000 miles going on either Monday or Tuesday, while the cash price is $10,000 on Monday, but only $6,000 on Tuesday. Thus to get the biggest savings you will certainly fly on Monday, right? Why would you pass up the $4,000 in savings?

Actually, no I don’t hink you would care. The cash price isn’t doesn’t become relevant until it approaches the range where you would consider paying cash, such as in the Detroit flight example.

That’s not to say it isn’t good to book premium awards if that’s what you really want, just that the nominal cash price doesn’t matter when it is substially above what you’d ever consider.

Tim Steinke

I’m impressed that it’s only February and you already have the front-runner for “featured image of the year.” Bravo.

Ed S.

While I appreciate the effort to provide clarity to an oft-discussed topic, the conclusions of the article fail to do so; applying layman’s terms (like “subjective value” rather than simply “value”, or “objective value” rather than “market price”) to redefine economic principles only convolutes things further.

What’s missing is a big-picture discussion of WHY the “value = asking/sticker price” perspective is problematic in the points travel hobby.

Most of us can agree that traveling via points can be described as a game of “cat and mouse”, in which prospective travelers are constantly making adjustments to evade the ever-changing actions of travel service providers and the financial institutions they used to encourage cashless travel purchases.

In that respect, it’s worthwhile to consider that transactions involve “price-makers” and “price-takers”. When travelers are playing this travel game well, we reject the notion that we must pay “sticker-price” for airfare, hotels, etc…in short, we reject the price that many/most others take for granted, and instead “make” a price for ourselves by finding alternative ways to purchase the same or similar goods and services. Granted, we are still “taking” the lower price, but the often-significant effort in finding a good points redemption should be distinguished from accepting a cash list price.

Like any seller, airlines and hotels would *love* for consumers to (a) pay higher list prices, and (b) remain loyal to their offerings rather than shop for similar “substitute goods” provided via another airline, hotel, or OTA. Simply put, the service providers want to be price-makers, and they want us to be uncritical price-takers.

And there’s the irony…when we choose to calculate our redemptions based on inflated prices that only reflect a single purchasing option in a brief moment in time (rather than taking the total market into consideration), we are the proverbial “mouse” defining the game on the “cat’s” terms, as if the lower-priced alternatives don’t exist!

Rather than falling into this mental trap, those who advocate the “next most likely alternative” cost model seeks to define a redemption from the *consumer’s* perspective…what we’d have otherwise paid for a similar service if we had to pay with so-called “real money”. The concept is similar to “BATNA” or “best alternative to a negotiated agreement” discussed in the best-selling book “Getting to Yes”, and stresses that better outcomes can be had when we reject traditional means of thinking about agreeing to a price.

So, do we want to discuss “value” in a way that supports an industry that works very hard to create “information asymmetry” (where one party benefits from keeping the other in the dark about the true cost of a good or service)? Or do we insist on establishing a reasonable baseline cost model…one that helps our fellow prospective travelers answer the question “which of these options is right for me”, as opposed to “which is a theoretical greater savings on a price I likely wouldn’t otherwise pay”?

Dave Hanson

Thanks for your thoughtful comment, Ed.

I especially appreciated your objecting to using as a measurement of value “prices that only reflect a single purchasing option in a brief moment in time (rather than taking the total market into consideration)”. That’s spot on.

To elaborate a bit further, the objective of what you call the “price-makers” here is generally to maximize aggregate revenue across their entire inventory, whether that is first-class seats, hotel rooms, or rental cars in a fleet. And achieving that goal implies a range of pricing, not a single price (to which some notion of “value” might then attach.) For example, take long haul first class seats:

First they sell them as paid FC, pricing at say $10k per ticketThen they release seats for points redemptions and to partners, at say $2k in value on averageIf there is less room in economy than in first as the flight draws closer, they may sell paid or award upgrades at say $1k a ticket\If seats still remain after all that, they may clear systemwide upgrades (or the equivalent) gaining $0 marginal dollars, but gaining elite customer goodwill.And the pricing on all of 1-3 will typically vary considerably before the flight occurs.

Last edited 7 months ago by Dave Hanson

Articles like this and their comments sections highlight why “value per point” is a useless vanity metric. It has no practical purpose.

What matters here in my subjective value of the redemption, but it is impossible to know. The key insight of economics is — people don’t know their “willingness to pay”, they can only decide whether to buy (yes/no) at a given price given their circumstance and alternatives. The subjective value for the redemption is higher than (or equal to) the savings, but impossible to put a number on.

So, what matters is how YOU simplify the decisions you have to make. In my case, I do this:

1. Convert all options to cash equivalents. I use acquisition cost of points because I feel I can generate more points when needed for future travel (thanks to points & miles games). If points are scarce in your case, use the typical redemption value.

2. I ask myself: which option would I rather take? Cash equivalent price vs subjective value. The choice is based on various factors like travelers, occasion, destination, comfort, which side of the best I woke up on, etc. Subjective.

3. I buy it (or make the award redemption if points). I never ask myself “how many cents per point” I got. The cash price for the points redemption is irrelevant.

Question for people here: does anyone here actually decide based on cents per point? If the Delta flight was $4k instead of $484, would you become more likely to choose that redemption??


Not me. I go for convenience and best schedule for me. Cents per point is an afterthought.




Your “value” seems to be only applied after the award is booked. At that point the valuation is skewed, because points/miles biggest limitations, limited scope of use (compared with cash) and very limited availability (compared with a cash ticket), are no longer issues. The valuation of points is evaluated before you have a booking, and it is simply the point price for how much you would be indifferent between buying and selling. This is fairly non-controversial if you ever took econ 101.

What you choose to value your redemption at is only relevant for bragging and for deciding whether a particular redemption is a good use of your points, which of course depends on the person. This is where your RRVs come in, but they are by no means indicative of “value”. If you’re using that to measure “value”, then you are subscribing to the late night informercial method of valuation.

Ken M

I love your blog. And podcast. I consume them both with gusto and appreciate all of it. Sincerely. This is an intellectual discussion, please do not take this as argumentative or otherwise too seriously.

But, respectfully, I disagree. Beginning with the title, where you rather boldly assert that the actual definition of ‘value’ in mainstream economics is incorrect. Debates of this kind can’t happen unless people agree on terminology (philosophers will say). I’m siding with the economists, partly because, to be honest, your definition of value smuggles price into the (operational) definition of value. This biases value in a way that makes flight and hotel bookings appear more valuable than they actually might be. That would certainly be true for people who just want to get from point A to point B and don’t care to shower on an airplane or what have you.

Last edited 7 months ago by Ken M

Also, you can pretend all you want that a gray market for buying/selling miles doesn’t exist, but it surely does exist. And there is a going rate for every award currency. Sure, that market is extremely segmented, and the rates may vary wildly based on what small subset one has access to, still, for anyone reasonably involved in this hobby, the range of market rates (or the internal between typical buying rates and typical selling rates) will be much much narrower than the internal between acquisition cost and airline-assigned “value”. A glimpse into the market would offer a much better idea than the approach outlined in the article, and better than the reasonable redemption value approach that you came up with years ago.

One issue with this is that the buyers are typically middlemen rather than end users, meaning, they, in turn, charge the end users higher rates for award tickets they book. They may find outsized redemption opportunities and people willing to take the risk in exchange for some savings relative to airlines’ fare. But those are travelers not concerned with miles at all – and I’m not sure that they need to be part of the equation.


I think the idea of an opportunity cost is once again so important here. It matters a lot for how we think about valuing points and miles.

I think Nick makes a great point about what your value/savings on a flight/hotel implies about your willingness to acquire points at a certain cost. I’m flying to Australia in Business Class on Etihad in a month or so. The flights would cost me ~$19k round trip and cost me 220k Aeroplan and maybe $150 taxes and fees. My Aeroplan points are “saving” me almost 9 cents per point. Fantastic! I’m really enjoying this because I get to go to Australia and in a much more comfortable way than I ever could have imagined without this hobby. You could say the points are “worth” 9 cents per point because I have a way to redeem them for 9 cents per point, but would I buy membership rewards points for up to 9 cents per point? Absolutely not! That implies that they are not “worth” 9 cents per point to me. There are many reasons for this, of course the most prominent being that I don’t have unlimited amounts of money to exchange. Money feels scarce, and points earned through the hobby “feel” free (even though they’re not, for reasons we’ve discussed here before).

When people talk about “value” in this hobby, I always take that to mean that there is a difference between the cost of an experience (flight, hotel, etc) and its value to you. Does it really matter to me that Etihad is charging $19k for this itinerary? Absolutely not, because I never would have paid for it. Can I say I’m getting a $19k experience out of this and not be wrong? Absolutely, but where it matters is what that implies about the decisions you’d make. I think you’re both right: I could say I’m “willing to spend” $2000 or so on this experience–which I am by not cashing out these MR points–but I’m okay with that because I’d much rather pay $2000 to sit in business class than be in economy for 24+ hours to go to a bucket list destination.

But, if in some fantasy world Etihad were charging $2000 for this itinerary, then we might have a conversation. Should I really be spending 220k Aeroplan/MR points if it’s only going to save me $1850 on this trip in this made up example? I probably wouldn’t. Why? Because then I could acquire the same experience in a more efficient way assuming I could cash out MR for 1.1 cpp at Schwab. It wouldn’t make sense to spend those 220k points just because there was availability on Aeroplan. What this says is then there is some middle point (which I couldn’t precisely identify) where I feel like I’m getting enough outsized value from these points (value in my terms here would be over an easily accessible outside option, aka an opportunity cost of redemption, like 1.1cpp to Schwab).


This is a great discussion line for bringing to front of mind a number of “valuation considerations”. So Greg, I am wondering if you are a buyer of MR Points at 1.55 CPP?

Implicit when valuing a sign up bonus with the model ((b*cpp)-fee): [total points times the cpp rate less the fee]; is purchasing MR at 1.55 cpp. For example, 150K MR at 1.55 cpp = $2,325, less fee of $695 = $1,630. If in the alternate, you were only willing to buy MR at 0.75 cpp, the valuation result in the above example would be $889. This result is obtained as follows: {(150,000-($695/.0075))*.0155} The proof is to substitute 1.55 cpp for .75 cpp in the formula. Doing so confirms the model ((b*cpp)-fee) implies purchase of points at 1.55 cpp as an offset to the fee.

Once one starts dissecting valuation models, the next most obvious question is what about the value of perks received that may reasonably offset the fee. Obviously the answer to that is highly circumstantially dependent. For some, the value of perks more than offset the fee. If that were the case, valuation would simply be (b*cpp). However, for those of us with nth Business Gold and Platinum cards, there is limited opportunity to easily obtain marginal value from the perks. In such a circumstance, it becomes material to consider the implicit purchase of points in the process of evaluating competing opportunities.

I appreciate the complexity level can become exponential quickly in developing valuation models. Nonetheless, many people may not be aware of the implicit assumption of purchasing points contained in the base valuation model. As such, some level of disclosure/discussion of the impact may be worth consideration.

PS: I suspect you may have already surmised, I have developed a model that considers all the elements discussed above. I would be happy to forward it to you upon request.


I’d like to see the model.


The problem is with the idea of an “objective value” is that the concept is intentionally meaningless by how the industry markets and sells its servicrs. Value itself is a fuzzy term, often employed in the marketing context to convince a buyer to buy a product at a higher price point based on a qualitative difference that may or may not be objectively verifiable. There is such a think as intrinsic, aka objective value, but it depends on what goes into a good

Listed business class seat prices are intentionally flaky. They are primarily sold at those prices to consumers spending someone else’s money (either their customers, shareholders, and/or employers) at inflated rates. The airline companies make 75% more profit off of them when compared to coach. The buyers cannot resell them on the open market, making them impossible to formulate a market price. Typically seats at this rate go unsold, and are given away to heavy users as upgrades or sold at significant discounts to participants of their fake currency loyalty programs.

Objectively valued products? Hardly. Inflated and overly marketed? Certainly. By all means continue to use them as your baseline for marketing referrals. But be honest that you’re advising how to discount luxury services rather than “saving” money. Obviously, they can save by downgrading their product selection, trading comfort for price or a la carting the services.

Also, please get an intern to torture by sending him on coach, road trips, backpacking, etc. to keep us personal finance types advised of savings opportunities also available, as we comprise the vast majority of the travel consumer base.

Last edited 7 months ago by Nate

Fun article. I find “ value “ is such a loaded term. Is what I would pay for a first class ticket my assessment of its value? Is the price others richer than I would pay for the ticket its value? Is it somewhere in between? Does it matter? Why do we spend our miles differently than we spend our dollars? Very few would spend dollars on a Porsche but happily spend miles on the first class cabin equivalent. So many questions my head is swimming.


greg. im so happy to finally see a post like this. 100% of people who attribute “value” of a product/service based on what a customer is willing to pay has no understanding of economic supply/demand market principles. only certain people with specific backgrounds can understand the cost/value/price ratio.

it would be interesting to see the demographics of those who play this game. i assume business/finance/econ professionals will be a huge group, but those who talk about redemption value and price elasticity are more likely outside of such professions.

i always ignore stupid talk when people say “im only willing to pay $1, therefore, my redemption value is $1 and only get $1 in value”.

Last edited 7 months ago by NinjaX
Mohammad M

I believe that the “value” is neither the “savings” or the “value” that you defined. This definition goes beyond points and miles. What is the value of that DTW-MIA? Assume that both flights were taking off at the same time but delta was more expensive just because people over there are loyal to Delta. Should I value the Delta flight more? I wouldn’t and if all else is about equal the value is the same for me. Let’s say that the delta flight allowed free bags but I’m not checking any bags, should I value it more for myself?

Mary W

100% agree.

Alex King

Nick, you usually are able wear down Greg with your advanced logic and reasoning, but I believe Greg has this one. The value, or as Greg puts it, the objective value cannot be disputed. It is the publicly available price. If you aren’t willing to pay it, it doesn’t mean that this is not the objective value. Airline prices cannot be negotiated in this way. Just because I would have never flown to Brussels were it not for Virgin Atlantic redemptions to fly on Delta doesn’t mean that isn’t what the value of those tickets were – usually selling for about $4,000 round trip. I suppose the better argument would have been that United or Brussels Airlines sells tickets at a different rate.

This can sound ridiculous, but if ANA decides to sell First Class for $40,000 round trip than that’s what the objective value would be. They would realize quickly that the price is too high and proceed to lower it to what the market would bear.

And one more thing, both you guys. Who is buying cars for under MSRP these days?


What if ANA has a 1pm flight for $40,000 and a 2pm flight for $4,000. Does the redemption on the 1pm flight have a value 1000% of the 2pm flight?

Alex King

This is an extreme version Greg’s AA/Delta example isn’t it? It does indeed. Makes one wonder what the reasons are for the difference. Business travelers? Cabin nearly full? Different airports? Different hard products?

Points and Miles Doc

But they don’t have that. Their pricing does not fluctuate an order of magnitude. If they did, they would sell out one flight and the other would remain open. The sold out one would have no options for points redemptions, making the value 0 for points and miles hobbyists.


It is NOT objective price. It is the airline’s ASKING price. Sure, you can’t bargain with them directly, but many seats will go unsold at that price and remain empty, some will be added to award inventory or given to elites as complimentary upgrades, etc. Often only a minority of seats in a given price bucket are sold. So, the price tag is meaningless.


If I buy a $20,000 Porsche, I can sell it for $20,000. If I buy a ride on an airplane, I have nothing left over after I’ve obtained whatever subjective value the service provided me.

And airplane seats, which are sold for varying prices in dollar and points, are particularly poor candidates to value at a specific dollar-denominated sticker price.


Cars are also sold at different prices, depending on how you negotiate with a dealership. Whether it’s a good or service or consumable doesn’t change the calculation. If you buy a $500 bottle of alcohol with Delta skymiles or with cash, and then drink it, you also have nothing left over. But you had still enjoyed a nice $500 bottle of alcohol, not $2 chuck from Trader Joes.


Great arguments and totally agree.

I think ultimately most of us care about value of our redemption because we have a finite amount of points and we want some guidelines to when to use them.

The pitfall of setting points value to what I’m willing to pay is the following scenario. For example, I would never fly 18 hours direct in economy to Singapore of my own free will much less woth a layover. Even if the ticket was free, I would not do it. On the other hand, even if I recognize the value of $5000 business class tickets and am willing to pay for it, I can’t afford it. How would you value points when it’s the only solution to visiting Singapore? It’s obviously worth more than the economy flight since I wouldn’t even take it but it’s also worth more than the business class flight because I can’t afford the airfare in cash.

I like the idea of using cost of acquisition as a commenter below suggested rather than the actual cost or what I’m willing to pay. For example if it costs me $50k spend to generate the points necessary for a business class seat, that value (time, effort to hit spend) is a lot more subjective to my situation. Someone might generate $50k in spend a lot easier than me so are willing to spend that many points a lot more freely. Thus we could say even if the cost of acquisition is the same and average redemption value is the same, I value the points more because I’m more selective on using them due to its scarcity in my situation.


The weakness of your analogy with getting Porsche instead of Hyundai is that I can sell that Porsche. The value is “real”, determined by after-tax proceeds in my bank account. The value of the flight on the other hand, is whatever price tag the airline puts on it, which is ridiculous if I wouldn’t even consider paying that much. In short, this isn’t a good approach, and the results aren’t even meaningful to the airlines, let alone passengers.


I look at actual cost to acquire the points in unlimited amounts as a base then decide if we get value or savings.

  • To get 100c cash you need 1$ – fixed value in unlimited amounts

To get a mile it is an average of the total miles (Sign up Bonus+ Bonus categories + regular spend) / total $ spend x 2.625c + Annual fee (less rebates)
Generally if it gets your cost below 1c, then you are doing well on the miles, else it is foolish.
The value you get from them may be higher, but the cost is well known and can be calculated yearly for each card.

e.g., regular spending on UA card is not worth the 2.625c lost cash cost for a trip to EU – For 155k miles cost each way – at that cost one can buy any ticket to EU for 4k
(or put up with coach for 7-8 hrs for far less)
Same with spending on DL cards – for the status and upgrades it may be worth it as the whole, but anyone who acquires DL miles from regular spend to use (at “value of 3c for Delta One) is a fool.
However, if I fly DL a lot, then it may be worth the spend to get PM or even DM every other year just for the benefits- but do not imagine the GUCs/RUCs are free – you have paid for them upfront with the spend cost.

Gary at VFTW also makes the point that it is the extra value you get at times based on miles balances and you next plans – after the AA miles promo from Dec 21, I do not use my AA card at all – prior to that AA miles were scarce and precious – after the planting trees promo with MC, AA miles are plentiful and cheap.

The whole game is for those like us willing to put effort into the miles universe.

Next, it is limited by spend ability unless one is a full time MSer like you at FM.
e.g., if I am on a 40k salary and spend 2k a month I can not easily do 50k amounts for 350k miles for the capital One venture X Business card even though it gets 7 miles per $ spend as a whole
However, I can do 2k spend a month and get through 2-3 cards with Sign up Bonus each year steadily

  • And for $190-250 a year I can plan my cards to maximize my point returns (as you have shown in great posts)

Most of us who get good at this, do a lot of spend and play multiplayer modes and try to maximize the options (perhaps not as much as you full time) and have fun doing it (per your post – “the Joy of Free”)

Mohammad M

I agree with your refundability argument. Your miles are worth more than the non-refundable ticket. I transferred a bunch of UR to SW (~1.4cpp) even though I could earn 1.5cpp via CSR. The fact that I can book random vacations when there’s a deal and cancel it later entirely free is worth something.


Great thought process, Greg. For me personally, I don’t look at savings the way you do and I most certainly don’t look at the actual cost of the flights we booked when doing this mental math of value of my points. I take a slightly different approach.

I maintain a very detailed sheet that tracks the “extra” fees that I pay to accumulate different types of loyalty points. I broadly categorize these fees in three categories – 1. Credit Card Annual Fees, 2. Credit Card Usage Fees, and 3. Points Purchase Fee. First one is obvious – its the annual fees less value of any offsetting statement credits. I often mark down the credits to their true value to me (e.g. Chase Sapphire Reserve’s $300 travel credit is valued at 100% while I value AMEX Platinum’s $200 FHR at roughly 75%). The second one is the extra fees that I pay just to accumulate CC points (e.g. Plastiq bill payment fees, mastercard gift card purchase fee, etc.). and the third one is when I buy hotel/airline points. I assign each of these fees to specific credit card where these fees were incurred. And each credit card gets assigned to a specific loyalty point category (e.g. AMEX MR, Aeroplan, Hilton, etc.). I am ignoring the opportunity cost of acquiring these points (i.e. you could get 2% flat cash back without paying any annual fees, etc.) since I generate a bulk of my CC points through spend that otherwise would not be possible with CC (e.g. taxes, utility bill payments), so that spend would generate 0% rewards.

This methods allows me to track the true acquisition cost of each loyalty program/point and when I redeem it, I calculate the acquisition cost of that ticket/hotel points using my above mentioned costs. Case in point – in a couple of weeks, my family of 5 (2 Adult + 1 child + 2 lap infants) are flying round trip Etihad airways business class from Toronto to Mumbai. We booked these are two separate one ways using Aeroplan points + AMEX MR points. The exact same flights would have cost ~$25k for all of use (plus the taxes and fees that we paid on Aeroplan award), while the cheapest roundtrip business class, if I were to pay cash (and still select convenient flight options), would have cost $12k (plus the taxes and fees that we paid on Aeroplan award). Had I been paying cash, would I have selected either of that options? The answer is NO. I would have chosen a round trip economy class flight options that were most convenient and that would have still cost us $7k for all 5 of us.

But lets take a step back – I feel the economy tickets prices are also too high, so I would not have traveled right now with $7k for economy flights. With a bit of planning, I could easily find flights to India for under $4k for all 5 of us, round trip. So for me, that’s a benchmark of how much I’d be willing to spend on these flights. Now, my acquisition cost of all those points was ~$1.4k – so in my eyes, I spent $2.2k ($1.4k points cost plus another $750 for taxes and fees) to buy 3+2 business class roundtrip flights from North America to India with a stop over in Abu Dhabi in both directions. That, in my mind, is the true value coming from this hobby – spending less than what I would have spent otherwise for the same journey, but getting an elevated experience throughout the journey.


This is where I have drifted as well.

I find that I need to look at my travel holistically. So much of my travel is discretionary, “willingness to pay” is often a useless metric for me because I take plenty of trips that I would have paid $0 for. (i.e., I would have stayed home that weekend in a world where points and miles didn’t exist, and I would have passed up even a rock-bottom rate because the trip was fun but ultimately frivolous).

I obviously crosstab my rewards obsessively, but my high-level gut check is rather simple, and that is to simply ask myself,

1) What did I outlay in a year in terms of fees, acquisition costs, additional paid travel, etc.?

2) Whatever that all-in number is, am I comfortable with that representing my yearly travel “budget?”

If not, just like if I feel my dining out is getting a little too spendy, trim.

If so, I rest in the knowledge that I traveled more, further and better relative to that budget being used to pay cash rates for everything.


Kyle – you summed it up pretty nicely! Long live the miles and points game so that we all can travel more, further, and better relative to what our budgets could otherwise afford us.


The use of the word “savings” to represent what you would have otherwise been willing to pay makes sense to me.

The idea that the redemption can have a “value” that is different from — and more than — the savings also makes sense.

The idea that the value can be expressed in dollars and cents, and that it is calculated from the retail price of the exact “thing” you purchase, doesn’t seem correct to me.

In Nick’s vie en rose post I commented with an example of one night in Paris in April where the five star Park Hyatt is available for $1,800 but an identically-sized room in another five star hotel in the same neighborhood but with a superior rating is available for $450 (and other five stars are similarly available for $700 or less).

There are also three and four star hotels with ratings superior to the Park Hyatt starting around $275 a night.

Now, imagine that I redeemed 45k points for the Park Hyatt. My savings are probably $275 a night. But unless you somehow derive value simply from the brand association of the hotel, I can’t see why the value of that redemption would exceed the price of an effectively identical, if not superior, stay nearby — in the $450 to $700 range.

Furthermore, if the value derives not from the commodity nature of the product (a clean, comfortable room in Paris) but rather from the nature of the hotel itself — having a five-star hotel experience — why not value it at the comparable cost of a five star hotel experience elsewhere in Europe, or even elsewhere in the world. The Park Hyatt Vienna is pretty widely regarded as a superior experience to the one in Paris, and it generally sells for around $500. And you can get a superior hotel experience in Asia probably for under $300.


Well, I would argue that the only (or primary) reason people book the notionally $1,800 Park Hyatt room with points is that the other options aren’t available with points.

Consider this with respect to your airline example: imagine the same AA and Delta flights but add a United flight departing at 8:35 am and costing $320. Do you really think that the value of the Delta redemption should be calculated from the cost of the 8:30 flight rather than the 8:35 flight?

Now, imagine the same flights, except the 6:00 am flight costs $3,200. If you now redeem for that flight, rather than the 8:30 flight you really wanted, do you honestly feel the “value” of the redemption is 10x higher?

I think there are cases in which you can determine a “reasonable value” using comparable cash purchases and, perhaps, some cases where this isn’t possible. When that happens, I guess there really just isn’t any way to objectively determine the value of the redemption.

Last edited 7 months ago by LarryInNYC

A couple general problems (not with your argument, just in general):

1) The term “value” is inherently vague (if anyone is a baseball fan, think about the annual debates about who the MVP is). You have a concept in your mind – why not just call it more explicitly what it is – something like “alternative cash price”?

2) Part of the problem I think is how dynamic the pricing is. The problem with your Porsche analogy is that the Porsche has a pretty stable, well-established price. There’s a stable market for it. I’d argue this is absolutely not true for things like business class tickets when the prices can fluctuate incredibly. When I can sometimes buy something for $500 (a first class one-way from LAX to ORD), then watch the price increase to $1300, then back to $500, and repeat, I am much less able to assign a “value” to it.

Also: “ there’s simply no better way to objectively value something than to see what that thing is actually selling for” – this is very clearly not true. I have a ball of lint I found under my bed and just put it on eBay for $100k. Is its objective value $100k? (I’d argue that some business class fares are only slightly less outrageous!)


Is the ball of lint still available?


“selling for” = price paid, not price asked.


Ok, that’s fair. But I’d argue that the concept of “selling for” is touchy-feely at best when it’s describing things that are as varied/dynamic in price as premium cabin seats. In other words, the more fungible something is, the more concretely we can claim to know its value or “selling for” price.


No argument from me! I think you are spot on. We tend to allocate the cent per mile value to redemptions but there are definitely other values that come into play. I recently booked 5 business tickets to Africa and paid a bit more than some redemptions that I have heard or seen. However, that’s FIVE which is harder to get so the value for me is much higher than the cent per mile redemption.

Nick Reyes

How do you reconcile this?

“For one-way flight awards, record the round-trip airfare and divide by two. Sometimes prices for one-way flights (especially international flights) are much higher than half the round-trip price. The same isn’t usually true when using airline miles (but it is sometimes true with Delta miles, FYI).”

Huh? But I’m not booking a round trip. What they charge round trip is as relevant as the cost of the 6:00 a.m. flight based on your logic. All that matters is the price they are asking for the one way, full stop. Right?

Related point: The price you see online is an asking price. It fluctuates based on how the market responds to it. In fact, the price you see is the price at which nobody has yet been willing to buy that seat (or else it wouldn’t be available). I don’t think it makes sense to value your miles based on an asking price.

The car example provides food for thought. Let’s say MSRP on your Porsche is $80,000 but you negotiate a sale price of $72,000. Do you value your pennies at the sticker price and say you got 1.11c per penny? Of course not. The sticker price isn’t relevant – the price you’re willing to pay is. Does that make an $80,000 Porsche “worth” $20K if that’s all you’re willing to pay? No, but this is where Julian’s example falls apart. In that case, you’d have a physical piece of property that you can resell, so it would probably make sense to value it based on the price you can resell it for – the value you could get out of it, not the sticker price that you wouldn’t pay. The purchase price of your home or stock you own is irrelevant to its value today – the value today is how much value you can derive from those things today, which we determine based on the amount of money we could get from them if we sold them today. When you drive your brand new Porsche off the lot, everyone knows it is instantly worth less than what you paid for it. It’s now used, so you can’t resell it for the new price – and you’re not a dealership, so you can’t resell it for the same price as a used car dealership, so it’s not worth those prices. It’s worth what you can get out of it in cash.

And that’s where the concept of valuing miles based on how much you’re willing to pay originates. It isn’t perfect. Unfortunately, you can’t resell your plans ticket, so it’s subjective by necessity. Just like you would value the Porsche (or any other asset you own) based on how much value you can get out of it, you’re finding a way to determine how much value you derive from the airline ticket, which is some combination of how much I’d be willing to pay for basic transportation from A to B plus how much of a premium I’d be willing to pay for the bells and whistles (be those flat bed seats and fancy champagne or a convenient departure time or a refundable ticket). I don’t derive sticker price in enjoyment out of the ticket or else I’d have already paid the sticker price.

In reality, the Porsche example fails as an analogy because you do end up with physical property that you can sell to someone who values it more highly than you do. You can’t do that with the plane ticket. A closer analogy is if you rent a car and get offered an upgrade. For instance, one time I wanted an upgrade to a Jeep and the agent offered it for $25 more per day. I said no thanks. They ended up giving it to me for free. Did I get $25 in value per day? I don’t think so – it doesn’t make sense to me to value it at a price I wasn’t willing to pay. Does it make sense to not value that upgrade at all since I wasn’t willing to pay for it? That’s not quite right either because I *wanted* the upgrade. But there have been plenty of times when I’ve received a free upgrade and not wanted or needed it – so I don’t think that it would make sense to value those upgrades that I didn’t care about – the price that others may have had the chance to pay (but didn’t, leaving that available for me to get for free) just isn’t relevant.

All that said, I enjoy feeling like I got a $12,000 first class seat as much as anyone. And I’ll even use that price to explain how the value is outsized beyond anything I’d ever consider paying. But if I start to do math and say that I got 20c in value from each mile, I think that’s overvaluing – and that type of overvaluing would lead me to make bad decisions. For instance, if I fool myself into thinking that I got 20c per mile in value, then I could MS at a cost of 10% all day long and tell you how I’m doubling my money.

At the end of the day, there just isn’t an objective way to value redemptions. I think comparing to cash price provides a decent first benchmark – and in cases where you would actually be willing to pay the cash price, then I think it’s easy to calculate the value you’re getting. But valuing redemptions in cases were you wouldn’t have even considered buying the ticket with cash, you need a dose of subjectivity. There are plenty of places I’ve been that I just never would have visited without a good redemption, so I’m not sure that the savings angle fits either since there are plenty of cases where I just probably wouldn’t have have it in mind to go at all, so I’m not sure it’s easy to calculate what I “saved”.

I find the post and argument interesting, but I disagree with the core of the argument.

Nick Reyes

Let me take another swing at persuading you to disagree with yourself. 

Let’s say there is an IHG hotel you’d like to stay at that costs $2,000 via at the “Best Available rate”. Let’s say I’m not a AAA member, but if I were I could book via IHG for 10% off (or $1800). However, the same room at the same property is available for $1,500 via or Expedia. Is the value of the stay the $2,000 that IHG charges directly or the $1,800 IHG would accept for it if I were a AAA member or the $1,500 that charges? What if an IBM employee pays $1350 for that room — do we now value it based on the public $2,000 price or the $1350 that IHG accepted from the IBM employee next door? That IBM example is precisely why I find the practice of valuing a cash ticket based on the “public” price so problematic — the airline is clearly offering some corporate customers that same seat for far less, so you’re comparing against a cost that nobody booking the seat may be paying since everyone otherwise booking it may be on a corporate contract. But let’s forget about the IBM example since we’re not IBM employees.

Elite benefits / hotel points aside, I think you’d say that it’s a $1,500 room — it doesn’t matter that IHG charges more on their own website, what matters is the best available price from a booking channel you’d normally use (the Expedia / price). If some shady website you’ve never heard of and don’t feel comfortale using (lets say NicksHotDeals dot com) were selling it for $1400, would it be a $1400 room? I’m not sure — since you wouldn’t consider buying through that channel, does it make sense to discount the value versus By the same token, if you wouldn’t book via because you want elite night credit for the stay, is it back to being a $2,000 room even though others sell that exact same room for hundreds less and even though IHG is willing to sell it for $200 less if I buy a $48 AAA membership?

Now let’s say that Expedia offers a coupon code for 33% off of any hotel booking, so the price via Expedia is $1000. That’s a great deal! But are you getting a $2000 room for $1000? Hold that thought.

Now let’s imagine that the same stay is available for 100,000 IHG points, which are currently on sale for half a cent each. That means you can buy the points directly from IHG today to book the stay for $500 all-in. Would you still pay Expdia $1,000 and say you got half off the hotel price? Of course not! You’d buy the points and book it. The price that some other booking channel asks (and perhaps some less-informed customer pays) doesn’t matter.

Now let’s say that if you didn’t buy the points for this hotel, you’d have stayed at a different property for $750 because $1,000 was out of budget for you. 

Did you get $750 in value or $1,000 in value or $1,500 in value or $1,800 in value or $2,000 in value for those IHG points? Eh — I’d say none of the above. I’d say you got $500 in value because that’s what the price of a 100K IHG point hotel is to me. It’s the price I’d pay if I wanted to buy that stay, the sticker price that IHG asks for it is irrelevant to me, whether or not they get anyone who actually pays $2,000. 

To be clear, I don’t get into the weeds on this on a daily basis — and I’d gladly buy the IHG points in that case, especially if I’d have otherwise been willing to spend $750 on an alternative hotel. And I think that one of the problematic things here is that when it comes to a travel redemption like a hotel stay, some people will look at it as buying access to a travel destination (you have to have a place to sleep if you want to sightsee) whereas other people see a hotel as a travel destination of its own. Whether you see the hotel as a means to an end (a place to sleep so you can travel) or an end of its own (a luxurious place to enjoy a stay) likely has influence on the way you value it. The same is also true with airline redemptions. And I’m happy to usually pull the wool over my own eyes and feel like I’m getting a $2,000 stay for $500 — that “deal” feeling certainly is nice and I both enjoy it and talk about it that way sometimes.

But I think that actually saying we’re getting $2,000 in value because asks that and maybe somebody else pays it is inaccurate — especially if you had the chance to buy it for $1,000 but you weren’t going to do that. I do think that what makes this hobby interesting is that I can find the person who would have paid $2,000 and show them how to book it for $500, thereby probably traveling more for less money. I think we all get excited about that part.

I’ll have to think more about your other points later.

Nick Reyes

Shoot, I neglected to include the most important comparison point: you could have transferred 100,000 Chase Ultimate Rewards to IHG to book the same property. Did you get $2,000 in value out of the points — a 2c per point value for your Chase points? Of course not. You could buy the IHG points for $500, so overpaid if you transferred the 100K Chase points — setting a value based on cash price is misleading.

Biggie F

Right … and, as at least a couple of others have alluded to above, you are getting closer and closer to the economics definition of price, which I loosely understand as the value at which supply and demand converge.

What I think we all have fun with is that hotel rooms and airline seats tend to get marketed and subjectively valued in ways with lots of sharp ups and downs, lots of discontinuities, that make it agreeable to spend some time and use some techniques to pay a price that is well below heterogeneous and sometimes onerous asking prices, and even below what would turn out to be general market prices (if there were a market of sufficiently homogeneous products).

Put another way: Others matter (as others note above with respect to the Porsche example.) You want to sell me a watch for $1000. I offer you $100. You weren’t paying attention and said, “Sure.” Now it is too late. I own the watch, and for $100. Did I save $900? Did you lose $900? It would be better if we knew where other sellers and buyers would have converged for a similar watch without the oddity of your inadvertent sales price. As you note, this would give us some “value” somewhere in between.


I love you guys, but these discussions make me feel like I have to choose which parent I’m going to live with after the divorce, lol.

I have an upcoming 4 night Kimpton that I’m booking for $500 in purchased points. Normal stay is 1200… do I think the place is worth that rate… meh. But at $125 a night, it’s a steal.

The quandary I’m having lately is what to value SkyPesos at… I COULD value them against the refundable ticket price, because that’s something I need.

The comparison I’ve been making lately is Amex Plat 35% rebate on domestic delta vs the new Delta Points – 15% discount (although this is more of a Greg question, since he’s the Delta flyer)


I usually dislike being the ‘both sides’ guy, but in this case:

Totally agree with the ‘savings’ definition for a personalized guide to points’ worth.

For a ‘value’ definition, cash price is correct BUT only with a significant sample size of actual transaction prices and including comparable products. So, something like knowing actual prices paid over the last year for 5 star base hotel rooms in good Paris neighborhoods in non-peak season that include corporate rates, government rates, sales, etc. and then using the lowest 25% of prices as a conservative value estimate. Of course, these data points are not generally available, and there is subjectivity in what are comparable properties, rooms, seasons, neighborhoods, destinations, etc. However, the single data point of what the cash price is when you look it up on one website or even an aggregator is not sufficient for objective value.

A sense of offering prices for comparable travel products annually might be the best estimate for objective value. So checking out comparable 5 star hotels at the same time frame makes sense to start down the path of a sufficient sample of prices. Not surprisingly, this method is the same as beginning of the RRV process where travel product prices are sampled.


Also not surprisingly, Nick brought up the need to consider the variety of prices paid for the same product, and for comparable products, in determining objective value, at the same time as I was typing!


Value is subjective. There’s no way to calculate “objective value”. There can be no universal consensus as to the absolute value of a thing at any point in time, but only a proximation based on historical data, let’s call it “market value”. This goes for miles, gold, money, stocks, etc. Price is in a constant flux as a result of market inputs from individual market actors assigning their own varying subjective values to things. Market Values/Negotiated sale prices provide a historical datapoints which inform individual buyers and sellers on how to assign a value/price for their own transaction, but that’s it. These historical datapoints provide only limited guidance for a transaction to occur in the future. The value of the thing for sale, and the value of the currency being traded can each fluctuate substantially by the time a planned transaction “closes.” Factors external to historical price data can, and frequently do, cause sudden and extreme volatility in price in both directions. You could say that historical prices of closed transactions provide the closest thing there is to a historical objective measure of market price, but again the usefulness is limited by the backward-looking nature. Buyers and sellers have to be more concerned with the assigning present and future values.

Your example about “objective value” of a Porsche coming to X points because “other people” are willing to pay $72k fails because it relies on a historical datapoint and denies the ability of the individual to calculate and assign his or her own subjective value to the car, and/or denies that each individual’s subjective evaluation has some impact on the offering price of the car. The selling price of the car has as much to do with how many people are unwilling to buy at a given price (based on their own subjective valuation) as it does with how many people are willing to buy at a given price.

There’s no objective value because the holder of the currency can and will place different values on both the currency and the thing being bought. A pure frugalist may want to maximize “savings” or costs which otherwise would have come out of pocket. Similarly, someone may place a high value on the ability and opportunity to use points to see how the other half lives.

At the end of the day, you’re using miles/points well if you’re spending them in a way that maximizes what is most valuable to you as an individual.


Seems reasonable to me!


I look at the “value” of a point/mile a little differently. To me, the value of a point/mile is what it costs me to produce/generate it, compared to alternatives (to cashback cards for credit card spending, to their equivalents without points/miles accumulation for flights/stays, etc.) Those production values would be used to decide whether it makes sense to use them or pay cash for flights or hotels.

Kevin McCallister

I often like to think of it similarly to Tony, where I consider how many $ of spend it would take to pay the cash price for an award in “cash back” on my best available cash back card (presently 2%). I then compare that to my best available card for generating a loyalty program’s points on un-bonused spend. Similar to the concept of opportunity cost but I think of it more as opportunity gained vs flat 2%. This way I can acknowledge the cash price as ultimately “the price” and avoid assigning subjective value based on what I might be willing to pay. I don’t honestly want to pay for any of it if I don’t have to.

As an example let’s say the Andaz Hollywood has a standard room available at either $500 cash or 22,500 points. Traditional “valuations” would peg an award redemption here at around 2.2 cpp which I imagine will sound reasonable to most. If I were to pay the cash rate using “cash back” it would have required $25,000 in spend on a 2% card. By contrast, the same spend on a CFU or CIU would have generated 37,500 URs. However since the award price is only 22,500 then I only needed to spend $15,000 on a CFU/CIU, saving me $10k in spend.

I can then safely argue that the remaining $10k in spend could generate an extra $200 on that 2% card. In this way the value that the point redemption provides is $200/night better than the cash rate. Another way to think of it is that I am +40% ($200/$500) on this redemption. Some redemptions could be higher and others could be lower. Others still could even be negative, indicating a poor redemption choice. But this relative percentage is where I can feel comfortable with any sense of “value” I might be getting from an award.

Here are 2 more quick examples to illustrate. Consider a standard room at Ventana Big Sur with a cash price of $2,000 and and award price of 40,000. Here the conventional cpp would be 5.0 but my relative value is +73%. Next consider a standard room at Hilton Santa Monica with a cash price of $350 and and award price of 80,000. Here the conventional cpp is 0.43 (not shockingly low) but my relative value is -52%.

There are so many other factors that can impact the equation (many in our favor) that it’s hard for me to ever assign an objective value to these redemptions. SUBs, retention offers, high spend bonuses, milestone awards, tier benefits, etc. can all juice the equation. But if I’m trying to assess the value I am getting from a particular redemption I find it helps to consider its relative value in this quasi vacuum of sorts. Admittedly not an easy idea to standardize for the masses but it’s what works for me.


Great post. In reality, both you and Nick are right on this topic. Generally, when this topic comes up, I always use the word “experience” when somebody inevitably brings up value, or what Greg calls savings. Yes, I could have spent $150 per night on the perfectly fine Holiday Inn but instead I used 30k Hyatt points per night to stay in an amazing hotel. Sure, I guess my 30k Hyatt points only saved me the $150 a night I would have been willing to pay out of pocket but the experience I get from staying in a luxurious, 5-star hotel that I would have never been able to afford is worth it.


Well argued but incorrect. Value is always subjective. The idea of “objective” value comes from a marketplace, where each subjective participant chooses his value of the item. It’s the collection of these people, the market where they meet, that creates the appearance of “objective” value. but there’s a problem: loyalty points aren’t tradeable. You can’t sell your points to me. So, by definition, there can’t be a market value, because there isn’t a market for the points themselves. There’s a market for the stuff we get with them, but that’s not the same thing. The companies constrain what we can trade the points for.

And let me pick a bone with your concept of “savings” vs “value”. You can’t save what you would certainly not have spent. I don’t shop cash F fares. I don’t research them or remember them. I’m not in the market. But I’ve flown F on CX and JL, paid with Alaska Miles. I’d pay $1,600 oneway for JL F ORD-TYO-BKK. If I pay with AS miles I’m saving $1,600. To say otherwise is to convolute the argument in a desperate attempt to win, rather than seek truth and logic, which I offer herein. Glad we got that sorted.


Of course price equals value. Earlier today bought a dozen eggs for $4. Later in the day, I stopped at another store and bought a second dozen for $6. On my way home I lost track which dozen was which, I am cooking them now, I am sure the $6 eggs will taste better because price equals value.


I try to put my value at what things cost at time of booking. But then I have no problem if that value prices as high as possible because it just makes me feel even better about using points for it! I would never pay cash for Qatar qsuites but it’s fun to tell people I’m getting crazy value out of my points!


Excellent, again!
Both the post and the comments.
Value (worth) is variable. “Whatever someone is willing to pay.”
All I can say is that, without this “hobby,” I would have not been able to have some amazing voyages.

John Thompson

I agree with your perspective but I have another wrinkle to throw in for myself. Being retired and with a limited income I often don’t have the choice of paying cash for flights or hotels. Without using points and miles I would not be able to afford the trips I take. I know I’m not always getting the best redemptions but without using the points and miles I have accumulated I wouldn’t be taking the trips I have planned: Ireland, Singapore & Frankfurt, 12-day European Cruise, and another 10 days somewhere in Europe late in the year. That’s close to $25k in “value” for a cash outlay of $2.5k. How do you place a “value” or “savings” on traveling or sitting a home?


I was just thinking about this. Booked our first trip in business class ever with miles.

Would we pay out of pocket for them? Absolutely not. Currently $7500 for 2 people.

Would we consider paying full price for economy? Yeah, we would, and have in the past. Prices are cheap rn for our dates/flights, $1250 for 2 people.

Would our trip even be happening without biz class? I’m not sure. At this point taking flights for >3 hours leads to immense back pain for P2, so at least this way we have a shot at having our entire trip be relatively pain free, rather than being laid up for 2-3 days upon arrival and then significantly limiting activities for the rest of the trip. And that’s not counting the fun food/drink.

Cash out value of points would have ben $2800. But I earned them w/heavy MS and a lil normal spend.

Value is a subjective thing, but I get to take my P2 on only his 2nd international trip ever (maybe we can call it a delayed honeymoon tho this is like our 3rd or 4th trip for that) and visit friends I haven’t been able to see in 8 years. = priceless, but if I have to put a $ on it, it’s going to be way closer to $7500 than $1250.

My two denar, anyway.


Very clear explanation! Bravo Greg.
Now let’s make all bloggers related to miles/point topics switch to this correct terminology.
We often see people mixing up points that can be exchanged for dollars (or gift cards that have similar equivalent to real money) – like Chase and Amex rewards, with “savings” that can be obtain by trading those points to airline/hotel points and then exchanged for travel contracts. A lot of blog noise build around that, and how to get either maximum “savings” or maximum “value” (if directly exchanging to dollars credits or gift cards). If cashing out – one gets the $ value; if trading for travel – one gets the $avings (from the expenses he is willing to pay for such travel).
So essentially it comes to choice: take the cash or take travel contracts. In first case the cash can be used for travel or something else. Pretty simple. Some mix those up and benefit from both opportunities (why not?)


One of the things I think that we have to watch out for is overvaluing hotel points. If the ideal hotel for my trip is in Neighborhood A (which has no points hotels), and I use points to book a hotel in Neighborhood B and walk 15 minutes each day to Neighborhood A, I am not getting the same value as if I had booked a hotel in Neighborhood A with cash.

Alex King

Yes exactly. This is why the argument over value works much better with airlines, where there are only a handful of non-stop options between point A and point B.

Takhliq Khan

Thank you Greg for highlighting this perspective. I can’t talk much about the domestic travel because I don’t do much using miles and points. I use my miles and points for international travel in business class for a family of 5.
Would I pay 6k to 8k per person to fly in Qsuites every year to Middle East or Asia? Obviously not. But when I score an award seat, I look at at as getting something at 80 to 90% off in a super super sale. So I agree with Greg. I look at the value I am getting.

Dave Hanson

Kudos, Greg, for wading into these murky philosophical waters! I have several reactions to this. Let’s start with your “price = value” claim.

When talking about objective value, there’s simply no better way to objectively value something than to see what that thing is actually selling for.

Respectfully, this cannot be right. “Price /= value”. Entire institutions, in fact, rely on these being different. And we all understand that being “overpriced” is often a real thing, as is finding a “terrific bargain.”

Take Stephen’s GCGalore project as a simple example. The entire site relies on the fact that gift cards often deliver outsized value for their price. A $50 Chipotle gift card generally has equivalent objective value today, tomorrow, and next week. But Stephen shows that the best price of this gift card may be $45 today, $42.50 on Friday, $40 on Saturday, and maybe 49.50 Sunday when no discounts can be had (slide offers 1% discount every day).

The stock market is a more complicated example. The claim that “price = value” is essentially the claim that stock market pricing is always rational (actually a much stronger claim than the so-called “random walk” hypthesis of Burton MaNual and others). This is not at all plausible (as crypto investors know all too well of late!). Many studies show this, and I’ll be happy to provide links in follow up comments if anyone doubts it.

Getting back to the subject at hand, one could argue, in fact, that this entire miles and points collecting hobby is devoted to the idea that we can capture value that exceeds the “price” we paid for it. So for example, many of us use something like a rough metric of 2c per dollar in value earned on CC spend. When we expect that the value we can enjoy from $1 in CC spend exceeds two cents in cash back, we’ll redirect our spend towards those alternatives.

Now, all that said, I do agree with you that “subjective value” has its own problems, even when that term is carefully defined and the figure is thoughtfully arrived at. But I’ll stop for now, as this post is already long enough. 🙂


Thanks for writing this! I was thinking along the same lines as I read the article. In reality, it really is a 2-sided marketplace, with consumers each having a view on “value” which when aggregated together create a demand curve and suppliers (airlines/hotels, etc.) setting pricing in a way they think will maximize the profit (combination of high price and high quantity.) In reality, any consumer will only ever book a flight if the “value” of it exceeds the price (either in $ or points.)

Where this gets interesting and where we’re laser-focused on is that the demand curve is influenced by the pricing decisions competing suppliers set! (A consumer may value LH F to Europe at 30% more than IB J… but given that IB can go for 34k avios vs. whatever other way higher price for LH each consumer will make their optimization choices based on what they’re trying to optimize for.)

All this to say… no one would (or should) ever actually pay more for a flight than they value it… it just doesn’t make sense. All of this cpp mumbo jumbo is really just a point to brag about to friends, family and strangers on the internet.


Finally! Another like-minded blogger who sees “value” is what you’re getting not what you’re willing to pay. I can’t imagine the hilarity if I were to go up the ANA counter and tell them I’d like to fly The Suite but only “willing” to pay $300


But you are actually doing that very thing every day with every item that is for sale – you’re just not telling the seller or even explicitly thinking about it in most cases.

Alex King

If you are not willing to pay $8 for a latte it doesn’t mean that its value is not $8 at the moment in time.


And if you are willing to pay $8 for a latte, it does not mean that everybody should value it at $8.

Helmut Fanheizer

If this is all you are willing to pay then you clearly don’t value what is being sold at the price it is available for. If you got it for 300 then that would be the vendor selling it a reduced cost, and no longer valuing it at the expected price. Just because you paid a lower bound of a price opportunity does not mean that you value it as such, because you could pay 300 and value it far higher. But why pay higher than you have to?


Since we are all small time players in the market, we have to accept that the price asked by the service provider is the value. Subjective ruminations re: what someone would have paid, or wanted to pay, or was willing to pay are meaningless.

Thus, trading X points for a product priced at Y means that the X points are worth Y. Pretty simple really, and ancillary discussions of “savings” are kind of pointless.


Amused reading this while sitting at Corona Beach House using CHASE. Priority Pass. Take that, Nick. I agree completely with Greg’s concepts. When the guy next to me and the woman on the other side of me paid $2000 a night for a fancy hotel room, it doesn’t matter to me what I would have paid for it. I am in a room for which everyone else is paying $2000. That’s good enough analysis for me.

Susan Scanlon

Sometimes the value proposition lies in the difference in price, whether in cash or miles, between the cost of a coach seat and a business/first class seat, or even in making a trip plausible at all. I just flew from northeastern USA to Cape Town in a Qatar QSuite. It was a 24 hour trip, 22 hours in the air. I would not have paid the cash price for this seat, which was about $5000 more RT than the cash price, but I was somewhat willing to “overpay” in miles to get business class on the dates I needed. Now that I’ve done it once I know I would never do it in coach, not even on Qatar.


I agree with you. There are many trips that I will never take if it’s in coach, that must mean that the value of my points is even higher than a coach cash price.

P2 spent her teenage years in Saudi Arabia (oil job for her dad). Up until recently we had no prospect to go back, hooray tourist visa! We’re booked and are going next week, blowout use of points for qsuites, those points are of course high value. Throw in Egypt and Jordan since we’re in the neighborhood… We’re a little cash tight ATM so i used flying blue miles for our regional flights, definitely low value as far as what those points could buy somewhere else but high value to me since we avoid the cash outlay. It’s all relative. And while I appreciate what bloggers say points are worth, in the end my value is found in getting trips I might not have taken or traveling in a higher luxury than I probably would have