Biz ticket to many places are > $3000. It would cost me roughly 120k miles so using this approach the CPM valuation is 2.5. This yields a highly inflated value when you are thinking about acquiring them. Given that miles/points are all about arbitrage, how does this approach help? You probably keep different values for acquiring and redeemping?

Precisely. Value is in the eye of beholder. I redeemed 50k miles for Yellowstone last year, only got 1 CPM but the trip was worth it. I'd have paid if cash flow wasn't tight.

If you have the ability to rack up points left and right, CPP analysis helps you optimize your strategy for earning and burning. One can find a good use for each type of points currencies given the number of destinations in the world. How much you can optimize depends on your constraints/flexibility. If you have too many constraints then there is not much to optimize. My vacation time constraints mean I really value direct flights, so I find value in programs like WN and VX, most FTers don't.

When I was single I didn't care for Europe, I was all about national parks. After marriage, Europe seems to bring a lot of value ;)

All CPM calculations are wrong but some are more useful than others. Definitely need a baseline to work with although reality might differ.

I always find this debate topic interesting. For individual redemptions the following seem to be the standard options for valuing your award value.

1. Value of points is based on market prices of tickets.
2. Value of points based on max price an individual would otherwise pay.

I wouldn’t presume to tell others how they should value their miles, but I tend to use a blend of the above. I fly almost exclusively in coach as I prefer quantity over quality of flights. Thus I will typically use the lowest convenient coach fare in calculating my redemption values. The problem I have with using method #1 exclusively is that it would dictate that the “smart” choice is always booking J or F tickets with miles. That said, I can’t use method #2 exclusively either as many of the trips I take with miles, I would not have otherwise paid for even in coach. My latest vacation certainly had a value greater than $0 even though I might have otherwise opted for a camping trip near home had I not had the miles/points.

This is probably a good way to put a standard value on points, but it’s something I generally ignore. I have only ever bought miles once and selling miles is not necessarily a valid option. I prefer to think of average valuation as either an average of previous redemptions or a lower end of such redemptions.

Actually, if done right, it would probably cost you way way less than $1,450 AND I had never ever considered that an option.

Up until the devaluation was announced, I'm surprised anyone would pay full price for 4 nights when they can get it at less than 25% of full value like this.

Hell, that is even less of an effort than spending $1500 for a 50k bonus...

I guess that thought never crossed my mind because I never wanted to pay for points :)

It's a two-way market on points. Most people here, myself included, would only buy them at .01 or less, but would only redeem points for .02 or higher.

It's hard to find a market-clearing price for points since there's no fair, centralized market for selling them directly other than back to the issuers, more or less.

And it's further complicated by the fact that opportunities to buy points straight up in bulk are limited, to protect pricing of F/J revenue tickets.

I think you are reading choice #2 wrong. Its how much you would be willing to pay for the ticket. That amount is not zero just because you would not have gone on the trip if it were not for miles. When I went to Greece I used 60K miles plus $100 taxes instead of $1400. If it were $1400 I probably would not have gone. But I probably would have paid $1000. So the value I got for my miles was $1000-$100 taxes/60K miles or 1.5 cpm.

I was just providing a very extreme example. The vacation I was referencing was a trip to northern MN for a wilderness canoeing and camping trip that were it not for miles and Cap1 points, I may not have been able to convince my wife to spend any amount of money on. In fact, she would probably joke that the value of that trip was $0 as she now refers to it as the ONCE in a lifetime trip. :)

I can see your point of view, but there have certainly been trips I have taken where, had it not been for miles/points, the amount I would have paid would indeed have been quite close to $0.

Again, not trying to say my perspective works for anyone else, but it works for me.

I think that's why there are two definitions of "value" here. Both of them are fair valuations!

Yes so it should be a bracket. the max value is 1.45 cents or whatever it costs to buy and the minimum value is what it costs to redeem.

So for me, on an Aeroplan mini-RTW J @ 125k, my value is cheapest economy ticket minus cashback/miles/etc (~15%).
Max value is 2.4 cents because that's why you buy it at, and minimum value for ME is around say, 1.5 cents if airfare costs around 2k cash.

how would you guys value a program like Lifemiles where the cost of obtaining the miles is far less than the potential redeem value of the miles?

Well I value any potential airline redemption as cheaper economy ticket, so not necessarily. Either the lower of that or the cost of buying the miles.