Gotta take into account what you would earn if you paid cash.

If the $700 flight is 5,000 miles in distance, my analysis would be that one's true cost to use 40,000 miles is those miles, plus foregone miles earning of 5,000 miles. So, my personal algorythm, when using 40k miles instead of $700 for a flight is that I got 1.55 cents of value.