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) ?