Which of these 2 formulas do you use to calculate value of your FF redemptions?

[JohnK]

I think value depends on the individual and the situation.

Let's say SYD-BKK is priced ~$1,000 for return economy. I value business class (And First class) at no more than ~$2,000 but to be honest I would not pay that much for it anyway.

I then use these figures to determine the appropriate value of my points. Economy redemptions are almost always never worth it. Business class is a little bit better value.

And there there is the situation where one needs to purchase last minute airfares.

I needed to book airfares for my fiancee BNE-SYD the past weekend and airfares continued to increase. I was hoping for last minute sale or Happy Hour but that didn't eventuate. When I went to book Virgin was ~$390 return and Qantas was ~$370 return. Not worth it. I could have saved some money by booking totally unsuitable flights. Both Jetstar and Tiger were ~$350 or more.

Luckily award availability opened up on Qantas on my flights and used 16,000 QFF points and ~$66 for the return flight so a value of ~2c/QFF point. Normally I wouldn't pay that much for a flight.

 

[Moindardt]

I think you need to take into account whether the award also fits your need. If you have to fly a day earlier than you would have, if you had paid for it, then there is a cost to that which reduces the value of the reward. The same applies to any "flexibility" you have to take with regards redeeming the award. On the flip side, if the award is exactly when you want it to be, on the flight/airline/time you want it to be, then its full value needs to be taken into account (assuming it wasn't available at a discounted price which you would have had the flexibility to take advantage of).

To use the house example, its all very well to say you would only pay $700k for the house, but that is only if it is a purely financial transaction. If you buying a house and you have specific needs and wants and that house is perfect and you had the financial means, would you go to $800k? Anyone who has bought a house knows this struggle.

A lot of redemptions are purely because you can, but a lot are also an enhancement on an experience you were going have and would like to enjoy at a higher level. For example, that reporter, at ausbt i think it was, that proposed and then did the awards trips/stays with his new fiance. The value of the points he redeemed would have to be taken at the full value because the whole experience was at such a higher level then it would have been.

WRT to the banking transaction, there is no comparison against the saving because you were using a credit card anyway and would have incurred the expense anyway. It only applies if you purchased the points or incurred some other cost (such as ATO credit card fees) to obtain those points, that would have prevented you from earning that interest in the first place.

We are looking at taking the kids on a 280k J RTW trip. I sure as hell won't pay for them to fly J (a heavily discount PE maybe), but the experience for them is worth at least a discount J (plus the $90 unattended minor fee I don't have to pay )

 

[footy99]

WRT to the banking transaction, there is no comparison against the saving because you were using a credit card anyway and would have incurred the expense anyway. It only applies if you purchased the points or incurred some other cost (such as ATO credit card fees) to obtain those points, that would have prevented you from earning that interest in the first place.

Just on this - if it was in reference to bankwest transaction ac - there's no credit card involved. It's parking money in that ac or savings which earns 0.4 pts per $100 per day or ~1c per $100 per day. So $250 (minus marginal tax rate) or 10,000 points depending on which you choose for ease of comparison. It's useful on the earn side to see whether you'd pay that much for a point, which takes into account a lot of what has been discussed here.

Sidenote: Now with the rate cut, it's probably closer to $230 (minus marginal tax rate) vs 10,000 points.

 

[knasty]

My valuation is a mix of what's been discussed already. I'm generally willing to pay a credit card surcharge of 1cpm for QFF, 1.5cpm for VFF / KF, 2cpm for AA. My valuation is based on my take on the relative mix of award points cost, 'taxes' and availability for each program.

 

[scaredeycat]

Let me throw another complication into the calculation. I've used points to get to Europe one way, and now take advantage of buying my annual return fares starting in Europe rather than Oz. I recently booked return J tickets from Stockholm to Sydney on BA for ~$5500 each. Had the journeys commenced in Oz, BA would have charged $7400 for the same itinerary (and that's on sale). Points have allowed me to position the family for this strategy and this has allowed substantial savings.