Regardless of what you think is a good redemption value, calculating cents per point is pretty easy. Divide the dollar amount by the amount of points. We’ll use United again as an example. Because good award availability is limited, I suggest starting there. Look at your dates and find the lowest amount of points/miles that works for you. Let’s say you found a round trip for 30,000 points. You then need to look at the cash price for those flights. Assume the total price is $600. Now open up a calculator and dividing the price by the miles or in this example 600 divided by 30,000. The result is 0.02 which is 2 cents per point. Note that not every point currency is worth the same thing. We’ll get into that in another post but lets keep with the 2 cents per point goal for now. Here’s a quick chart for you to illustrate all of this:
Airline miles such as united:
Miles vs minimum ticket price at two cent per point
15000 – $300
20000 – $400
23000 – $460
25000 – $500
30000 – $600
32500 – $650
35000 – $700
It would be impossible to fully populate this chart as United uses different numbers such as 20.1k, 28.2k, etc but I wanted to just use round numbers for this example so that you can really understand the math. So using those number above, if you find a ticket for $324 dollars you will want to find availability at 15,000 miles. If you can’t find that, then you should book cash. If you find a $400 ticket for just 15,000 miles, you found yourself a nice deal.
Just keep in mind that there are fees associated with the award ticket but on domestic routes, they are usually pretty low so they don’t factor in too much. However, international fares can have much higher fees so you have to subtract that from your calculations. Thus, if you find a $325 flight for 15,000 miles but the fees are $75, then the real cash price that you would have to pay is $250 (since you are paying at least $75 no matter what). That turns a good deal into a not so good deal.
Hotel rooms work the same way but you have to be sure to use the total price and you have to see if there is any additional cost with using your points. For example, if you are booking a Hyatt hotel you usually won’t have to pay taxes, resort fees or anything else. Thus, you cannot just look at the initial price of say $1000 for the week. You have to look at what the total price would be if you paid cash. More travel sites are showing this up front but you might have to do a mock booking at go to the payment page to get the real total. Then you compare that to the amount of points you’ll need. Quite often you’ll see that a decent deal turns into a good deal once you factor in all those pesky fees that you’d have to pay if you used cash.
But again I have to say that what is a good deal for you might not be a good deal for someone else. You might see someone else got 5 cents per point by using 400,000 points on one hotel. Ok great but if you did that, you’d be blowing all the points you worked hard for. Those 400,000 points could be worth 5 trips for you. Would you rather get 5 cents per point on one trip or 1.8 cents per point on 5 trips? Only you can decide what makes the most sense. Don’t let anyone else tell you otherwise.