Why have I calculated such a low cents per point value?

I calculated Velocity points to be worth 0.15c per point to me - which is not in the same ballpark as general advice to aim to earn at max 1.5c per point, and redeem at a minimum 2c per point. Can you help me check my working and conclusions?

Keith, in the pointhacks email course, uses an example:

“A return Business Class flight to Amsterdam, from Sydney. This redemption would usually cost 136,000 KrisFlyer miles plus $925 in taxes, all up. I personally be happy with an out of pocket cost of up to, say, $4,000 for this Business Class return trip to Europe. That means I am valuing those 136,000 KrisFlyer miles at $4,000 less $925 for the taxes, or $3,075, which gives a cents per point redemption value of 2.26 cents. At a cash cost of around $7,500, I would be getting a cent per point value of 4.84 cents.”

Let’s see if I can follow the same logic:

A return business class flight to London from Melbourne. Velocity quote 309,000 points plus $1629 in taxes. I would pay 40% more than an economy fare of $1500 to get into business, so I’d pay $2100. That means I am valuing those 309,000 Velocity points at $2100 minus $1629 tax, which gives a per point redemption value of 0.15c. At a cash cost of $6824, I would be getting a cent per point value of 2.21c cents.

Again, if I consider general advice to aim for earning Velocity points at no more than of 1.5c per point, and redeem minimum 2c per point – this is not in the same ballpark of how I value Velocity points at all (0.15c per point). Have I misunderstood something here? Or is this actually highlighting that, (a) I’m a cheapskate and wouldn’t pay a fair price for a business class seat, and (b) This particular redemption example I chose isn’t a good value one and I need to target a sweet point (such as the KrisFlyer example) ?

The problem is your fees are very high, which means your looking at an Etihad flight right? Go for Singapore Airlines @ 139K points each way, plus negligible fees. So that’d be 278K points plus $480 for comparison booked through velocity.

Or for 142K transferred to KF could get the same thing except with better availability. Same fees on krisflyer too. Approx cost 284K points (velocity transferred to KF, yielding 210K KF miles) plus $480 in fees (London Heathrow is very expensive to fly out of for fees in premium cabins, so maybe consider another European exit port? It’ll save U a couple hundred bucks.)

Added benefit of paying the extra 4K velocity points when doing it via Krisflyer is that you get a free stopover (in Singapore as it’s the only place U stop in both directions) by booking a return award flight on KF.