Q: How much is a mile worth?
A: A frequent flyer mile is generally worth between one and two cents. There are a number of ways of arriving at the one- to two-cent valuation. For instance, airlines sell miles to program partners and others at that rate when promoting sales of their products and services. Or, if you assume that the revenue from a ticket averages $400, and you can redeem 25,000 miles for it, then the value of the miles on that trip is 1.6 cents, which is in the middle of the range.
Notice, however, that the value of a mile relates directly to the dollar value of the ticket for which you're redeeming the miles. If you redeem 25,000 miles for a ticket you would have purchased for $89, the value of the miles you will have used is 0.36 cents per mile. However, if you use the same miles to procure a ticket priced at $2,000, then the value of your miles increases to 8 cents per mile.
So, when redeeming your miles for an award ticket, consider the value of those miles relative to the dollar value of the same ticket if you were to purchase it (i.e., divide the price of the ticket by the number of miles you would have to redeem for it). In some cases, it makes sense to buy a ticket instead of using miles.
