How do you calculate value on a cash & points booking??
 

I'm sure there is no one correct answer here but I'm curious how folks do the math.

Say a room is $100 or 10,000 points. It is east to say that's a penny/point (though it will be slightly higher due to taxes). But what if there's also an option at $40+3000 points.

Are the points worth 2 cents each (3000 points makes up the $60 I'm not paying in cash for the room)?

Or are the points worth 0.57 cents each (I spend $40 to "buy" 7000 points to complete the award)?

Something else??

Does the stay still earn points? If not, or if the amount is reduced, I would say you also "spent" the forgone points, and this would lower the value per point. There might also need to be a further adjustment if the stay/nights do not count toward elite status.

I agree those are both considerations. But it doesn't change the basic math on how one calculates what the points spent on the award portion of the C&P award are based on the two approaches I've described here.

If that $100 stay would also earn you 200 points then the numbers are $60 for 2800 points or $40 for 7200 points. Not enough of a difference to matter. And I've already noted that the taxes skew things, too.

Really just looking for opinions on the basic approach to accounting for the cash v points in the booking.

When comparing C&P to straight points, I compare the cash portion of the C&P to the extra points and decide if that's a good value. That's a fixed amount, so it can be precalculated for all categories. (My conclusion here is that C&P is always better unless you're really short on cash.)

When comparing to cash, I take the real point value (point cost + points missed) and compare that to the cash discount. For me, these values are different depending on whether the booking is in the U.S. where I use my SPG Amex, or elsewhere where I use a cash-back card.

Except that it earns 300 or 400 for elites, or more if there's a promo. I have an Excel expression that gives me the exact answer I want, and it definitely does make a difference.

You could use weighted average to simply compare points vs. cash & points. I am not a math wiz, but will give it a shot....

Points:
$100/10,000pts = 1 cpp

Cash&points:
$40/7000 = 0.57 cpp
$60/3000 = 2 cpp
.57*40% = .228
2*60% = 1.2
Weighted average = .228 + 1.2 = 1.428cpp

There are literally hundreds of pages of debates here over this very matter. Happy reading!

For me, the value of the miles/points is equal to the cash price I would be willing to pay for the room/flight (up to the actual amount), less any portion actually paid in cash.

For example, take a room where the nightly rate is $200 cash or I can pay $80 + 10,000 points - if I actually would consider paying $200 for the room, then my points are worth ($200 - $80) / 10,000 or $0.012 each. If the most I'd pay for that room is $150 though, then my points are worth ($150 - $80) / 10,000 or $0.007 each.

Same logic applies to plane tickets where there is no cash portion. Let's say a Business Class ticket currently sells for $7,500 cash or 125,000 miles. I'd only be willing to actually pay $3,000 for that ticket. I value the miles at $3,000 / 125,000 = $0.024 each. This stops me from overstating the value of my miles when the cash price is something I'd never pay.

Something like this for me, too.

Value of a point/mile = what it replaces in cash that I would have otherwise actually spent for the same product.

This is, of course, in my current situation of generally having enough cash to pay for what I want (aspirational trips excluded, of course). Many moons ago, I was able to burn miles at what some would consider terrible CPM rates, but to get me to family events that I otherwise would not have been able to afford attending. You could say that in those cases, the miles were worth much much more.

I take the latter method, the buying points method. With Starwood and Hilton and LifeMiles and IHG, it's very straightforward because there is no difference between whether you use all points or C+P. However, with Hyatt I always include the amount that I'm willing to pay per elite night because C+P counts as elite night and point redemptions do not. I'm willing to generally pay about $20/stay (varies according to promos, of course), so I factor that in and will "pay" a little more to do C+P. I do very few paid stays with Hyatt.

I use the same logic. Points are worth the cash amount that I would actually choose to spend, for the same product or a similar one. Recently I redeemed 240,000 Marriott points for a 7 night stay. The hotel was asking over $800/night, tax included. Does that mean my Marriott points were worth around 2.5 cents apiece? No, because I wouldn't have booked that hotel for $800+. At that rate I would have chosen a competing property with similar amenities a few miles away for just $350/night. Thus I count these points as returning 1.1cpp of value.

I would value the transaction based on the cheapest means of obtaining that room based on my points valuation. The points would be worth their conversion value based on whatever I was otherwise going to spend, either the cheaper cash or points option. In your example, if I generally valued those points at 1.5 cpm (i.e. Hyattish), the the cash rate is what I would normally pay. I'd consider myself using 3000 points to save the $60 I would have spent, therefore redeeming at 2 cpm. If I valued the points at a much lower value (say 0.3 cpm Carlsonish), then I would normally redeem points. So I'm spending $40 to buy the 7000 points I needed to complete the reward, paying a rate of 0.6 cpm.