What Are My Miles Worth?
In this section, we'll talk about how to put a dollar value on your flyer miles, and how to avoid falling into what I call 'The Spreadsheet Trap'
Let's get started!
Read ten travel websites, and you’ll find twelve different “definitive” formulas for calculating the value of a WidgetAir mile down to the tenth of a cent.
Miles are imaginary currency made up by the airline. To me, the only way to tell what a mile is worth is to look at what tangible thing it gives you.
I guess it makes for solid clickbait to brag about the “$22,000 worth of business class flights” you got for your miles, but let’s be honest, if you’re reading blogs about air miles, you were ever going to spend that kind of money on flights. I know I’m not.
So, let’s keep it simple.
If you used 25,000 miles instead of spending $500 on a round-trip to Montreal, then those 25,000 miles were worth 50,000 cents, or about 2 cents per mile. Pretty simple, and pretty good value.
I use this as my baseline. If you’re not getting about that much value out of spending your miles, it’s time to re-think your strategy.
I recently had to cut short a trip to New York, drop everything and get back to Toronto quickly. Booking a one-way flight, leaving right away, would have cost upwards of $350, so instead I redeemed 7,500 Aeroplan miles and paid $50 in taxes for the same flight.
7,500 miles were worth about 30,000 cents, or 4 cents per mile. Great value for an unplanned expense, but not something I can plan on regularly. In this case, a small stash of miles were still a valuable tool to have on hand.
Let’s say you’re planning a vacation from Ottawa to Taiwan. You can buy an economy ticket for $1,500, or spend 75,000 miles – this is pretty much the same value as Example 1, which is just fine.
However, using miles might give you the option to add in some stop-overs, which you can’t do with your $1,500 cash ticket.
Using miles also gives you the option to book business class seats, too; in this example, you’d pay 150,000 miles, and spend those 32 flying hours in a flat-bed seat with someone bringing you champagne.
It’s hard to put a price tag on those two miles options; the rich folks sitting next to you in business class might have paid $10,000 for their tickets, but you probably weren’t ever going to splash out that kind of cash, so it’s a bit much to claim your 150,000 miles were “worth $10,000”, isn’t it?
The Spreadsheet Trap
When there are so many different valuable ways to use flyer miles, it's always a bit tempting to get caught up worrying about getting "the most" out of your miles. Heck, there are whole Internet forums where people use complex spreadsheet calculations to brag about getting 1/10th of a cent "more value" out of their miles redemptions.
It's not uncommon in these cases, to see people taking longer flights with extra connections, just to get onto flights that would have cost more if they'd been paying cash.
To me, this is insanity - and it's my job to nerd out over flyer miles!
Flyer miles exist to save you money, and/or to give you access to great experiences - in other words - to let you relax and save you some stress.
As soon as you start spending hours obsessing over squeezing out those last extra pennies, you're losing the game.
You should keep a rough idea in your head about the value of your miles, to (1) help you decide which type of award flights are worth spending your miles on, and (2) to give you an idea of what kind of miles-earning offers are worth pursuing.
Ultimately, the best value for your miles is whatever helps you take the trip you want.
Do The Math: Is **Insert Promo Here** Worth It?
Let’s say you’ve found an offer where spending an extra $20 on a car rental earns you 5,000 extra airline miles. Not common, but it happens.
So, you’re getting 5,000 miles for spending 2,000 cents. That’s 2.5 cents per mile, pretty decent deal. If you do it five times, you’ve basically spent an extra $100 to earn 25,000 miles, which is a pretty good deal indeed.
In a situation where you’re earning miles on money you were already going to spend, it’s all good news, just let the miles pile up until you’re ready to use them.
In a situation where you’re spending extra money to earn extra miles, it’s worth doing a quick bit of napkin math to make sure what you’re doing is worthwhile.
Remember – these programs exist to influence you to spend more money, or to spend it with specific companies. Just make sure you’re taking advantage of these offers, not the other way around!