The key metric you need to ask yourself is the maximum $$$ you would pay BA for Club over the coach option you would otherwise fly?

Would you pay $100 more for BA Club? $500 more? $1000 more?

At what point would you say the upgrade is not worth the $?
The $ amount right below that is your maximum and how much the upgrade is really worth to you. If you would pay a maximum of $500 more, you are getting a value of $500 for those miles.

The value you get from miles in a particular redemption is not normally what they are worth to you. You should attempt to only use miles in circumstances where the value you receive from them exceeds their worth to you. Sometimes the gap will be big, other times small.

Opportunity cost should be the primary factor in determining what miles are worth to you. If you do X, you cannot do Y with the miles. How much are X and Y worth to you?

Take two business travelers who earned 500K miles from travel for their employer.

Business Traveler A:
Lives in STL. Feels like he travels too much already. The only place he wants to go is to DFW to visit his sister several times a year. He isn't close to anyone he wants to give his miles away to. He redeems 25,000 miles 4 times a year to visit his sister in Dallas. Deep discount tickets in the market cost around $150 and he would have bought these tickets. So for him, his 500,000 miles are worth about $3000. (20 ticket x $150 = $3000)

Business Traveler B:
Lives in STL. Enjoys an exotic vacation every year. On average, he uses 100,000 miles/year on tickets that would have cost $2500 (deepest discount). He would never have paid $2500 for these tickets if he didn't have the miles but would have paid up to $1500 cash for these tickets to these places he wanted to go. Business Traveler B is getting $1500 value from 100K of his miles, so his 500,000 miles are worth $7500. ($1500 x 5 = $7500)

Beaubo - lets say the employer of Traveler A paid $25,000 for his tickets each year.
Meanwhile Traveler B's employer only paid $8,000 for his tickets each year.

You would tell me that Traveler A's miles are worth more than Traveler B's miles because of the cost of the tickets? Even though Traveler A will use all 500K miles on tickets that he would have paid $3000 for while Traveler B would have paid $7500 for the tickets he redeemed his miles for?
The majority of BIS miles earned are because individuals are already traveling on a particular itinerary and want to earn miles while they are at it.
How is this different from the folks that are already spending and want to earn miles while they are at it?

Both scenarios have opportunity cost.

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Some expert MRs consistently earn RDM for half the cost they would pay for the tickets they use the RDM on.
Example:
Expert MRer earns 500K RDM at a cost of $7500.
Expert MRers has specific flight needs they would have paid $15,000 for.
Expert MRer redeems the 500K RDM for the flights and pays $0. (Ignore taxes for simplicity)

IMO, the Expert MRer got a value of $15,000 from the miles. Not the $7500 they paid for the itineraries they flew.

If the Expert MRer's friend wants to use the 500K RDM, should the Expert MRer consider he is giving his friend miles worth only $7500?

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Those who say they get a $14,000 value from an F ticket to Australia are fooling themselves.
Unless they would have paid $14,000 for that ticket if they had no miles.
Again, the value of those miles they use for that F ticket to Australia is the maximum cash $ they would spend on that ticket if they had no miles. If they spent 150K miles on a ticket they would have spent a maximum of $3000 cash for, they are getting a value of 2 cents per mile.

A person who has more trip needs they can use miles on should value their miles in their accounts higher than the person who has less potential trips.

If person A has 500,000 miles and can only forsee trips that will use up 400,000 miles, they should attempt to use miles on every trip, even those that cost little cash and are a poor use of miles.

But person B who has 500,000 miles can forsee trips that will use up 4,000,000 miles. They should attempt to determine which of these trips will save the most $/mile if they use miles instead of cash. They should maximize the use of their miles and buy all of the tickets that are a lesser use of miles with cash.

Miles are worth FAR MORE to person B than person A.

It does not matter what person A or B paid for their miles!

Of course, there is always the valuation method of what the market will pay for the mile.

Without having purchased tickets to ACQUIRE hard cost RDMs or having used affinity credit card spend to ACQUIRE soft cost RDMs, then you would not even have the choice of determining what your opportunity cost of USAGE would be.

Once EARNING the miles are completed via limited and quantifiable RDM sources (BIS, cc spend, bonuses/promotions), THEN all of the fun and zany BURNING valuation scenarios can be trotted out. Whether you can leverage $5000 of 500K of RDMs into 25 'low value' domestic coach awards with retail cost of $4000 or 3 'high value' international First awards with retail cost of $40,000, your hard out-of-pocket cost of those miles indeed do not vary.

Totally Free Miles And Travel
 

http://www.flyertalk.com/forum/showthread.php?t=826374

I bought a gift card for 100€ (which I can use to buy groceries) and got 2 return tickets within Spain on Air Europa (FB partner). I had to pay the taxes and fees (23€ to any Balearic and Canary island).

I got a Europe 'free' ticket on Spanair (Star Alliance) by spending 300€ on an Amex card. In Spain, there is no cash-back credit card to my knowledge. And 3% would have earned me 9€...

I tend to greatly prefer those offers rather than legacy carriers' offers and use the cheapest option otherwise.

I will use my incidentaly earned miles to expensive destination (think Africa).

Completely setting status benefits aside, and strictly talking about value of miles/points/etc, the value I put on my miles is in the satisfaction I get from how I use them.

An example, I just used about 200,000 or so American Express Membership Rewards points to book round trip travel for three of my less-fortunate relatives from their home in Europe to Disneyland, here in California. Two kids and their mother who never would have gotten to see disneyland otherwise.

The cost of the travel otherwise if booked directly through the airline in a non-deep-discount bucket would have been about $3,500 all-in. Mathematically, it was a good redemption as far as I'm concerned, but that pales in comparison to the value of two kids getting to fly on an airplane for the very first time, and go to Disneyland.

There's a lot of value in being able to just pull some points out of your hat and make some magic happen for someone.

As the owner of a small consulting firm, I have to make this choice frequently. I bid on jobs and give clients the choice of hourly rates plus expenses or a flat fee which covers everything. Travel awards are important to me, in that they save me money which would have been spent to perform the function I was hired to perform.

If the client pays expenses, then all tickets are purchased at the lowest cost for non-stop travel. If the job was on a flat fee, then I use award travel as long as the net savings equals at least 2 cents per mile after all fees. Hotel points for free nights are also very important. I even use Avis awards earned under their small business awards program.

I have personally flown on over 80 award round trip tickets. The vast majority were for my business. I have had over 100 free hotels nights between Hilton and Marriott. I use 1 cent per point on Hilton and 1.5 cents on Marriott as minimum bench marks.

So for some of us the value (savings of required spending) is measurable and can be easily quantified. Many of my greatest savings came prior to 2001. Back then a business traveler without a Saturday stay paid huge amounts for travel. Now my savings are greatest on hotel programs.

Miles are worth what you can get for them, not what it cost you to get them. As a rule of thumb, I value them at $.01/mile (down from $.02/mile years ago).

Having said that, I agree with the poster that said it varies, because what you can get for them varies. If it takes more HH points to get a comparable room than it does for Marriott points, than the Marriott points are worth more.

One thing I do when I'm deciding whether to purchase a ticket or redeem miles (assuming it's possible) for an itinerary is divide the price of the former by the # of miles for the latter. These days I'll make the purchase if I'm getting better than $.01/mile. Not a hard and fast rule, but if I'm getting something like .001 per mile, I'd definitely buy the ticket, and if the ratio were $.05/mile, then I'd definitely redeem for an award.

But it all depends. For example, if I need the miles to become elite at year's end, and it's not a big purchase price, I might purchase the ticket. tls

Everyone who uses miles for one trip instead of another has an oppurtunity cost: the other trip.
Most people have a hard out-of-pocket cost for miles of $0.

These people's miles are not worthless and should be valued.

Just becausse they paid $0 for them does not mean the miles are worth $0.

Most people do not spend money just to earn miles!

Two cents a mile
 

For years, I have valued my AA miles at 2 cents each, and I hoard or spend them accordingly. It's been a good framework that has worked well for me. For example, if a 25K-mile award ticket for a family member could instead be purchased for less than $500.00, I'll typically buy the ticket rather than spend the miles.

If it's a ticket for myself, the calculation is more complicated, because I look at the *net* cost. For example, consider a business-class trip to Europe (say, 12,000 miles round-trip), for which a coach ticket costs, say, $900. A one-way upgrade is 25K miles plus $300, or $800 including the cost of miles. So, with a round-trip upgrade, the net cost is $900 + $800 + $800, *minus* $480 (the value of the 24,000 miles I *earn* on the trip). So the net cost is $2020. Or, I can use a 90K-mile Business Class award and earn no miles for the trip, for a net cost of $1800, which is less.

Many factors can affect the calculation above, including higher/lower coach ticket cost, higher/lower assumed dollar value for miles, assumed value of business- or first-class seats, and need/desire to earn domestic upgrade miles/credits or status. But having this framework makes it easy for me to decide whether to hoard or spend.

Given that I have accumulated over two million miles "in the bank" over the past 6-7 years using this approach, it may be time for me to lower my assumed dollar value for miles. On the other hand, I keep telling myself that someday the award tickets for a big family trip with the three kids and their spouses and other hangers-on, in business or first class to Australia, is going to cost me upwards of 1.2M miles, so I better keep hoarding!

I've always valued them at exactly 0.

Like someone before noted, if any carrier goes kaput, so could your miles, there is no FDIC for this currency.

I think of them more as potential vs. kinetic energy, where like a gallon of gasoline I could get less than 10 mpg in a gas-guzzling SUV, or I could get greater than 50 in a gas-sipping hybrid.

The miles, like the gas, have a wide range of uses, "kinetic," when issued as tickets, hotel nights, even magazines, but just remain "potential" while they sit in my accounts.

I value my miles at whatever I could buy them for - for example 2.5 cents for AS miles - because I have no difficulty redeeming them for much more "face value".

My reasonaing is that on TATL/TPAC F/C/J awards and MFUs the apparent value is much higher. For example BA 25k LAX-LHR MFU works out ~15 cents/mile. Additionally, I have paid >$2500 for a TATL C/J ticket (out of my own pocket) in the past, so this valuation passes that test also.

The bottom line is the value is to what the miles are used for. Recently, a friend of mine was using 50k for 2 domestic RT tix. Looking at a web site, the same tickets could be bought for $178 each. We made a swap and I used the 50k for a trip to Europe with a stopover. This would have cost me almost $2000 according to the a/l. You do the math.

I don't think there's a simple dollar amount that i put on my miles. I use them for two things: trips to Montreal a few times a year to see relatives, which are always at least $500, so to me a good deal at 25k miles. for two of us, $1000 spent today vs 50k miles that i already have in the bank is a no brainer. The other thing i use them for is vacations to exotic places i would never buy a ticket to. I would never buy a ticket to australia for vacation, i would go somewhere closer and cheaper... however i would spend a few hundred thousand miles for a couple of biz class tickets over there and enjoy the vacation of a lifetime. worth noting, i earn 95% of my miles on company paid business (free for me) and maximizing partner promotions (credit cards, 5k bonus miles for renting from a certain car company, etc). i've earned almost 50k miles in the last couple of months by simply renting and staying at the proper partner, when i have my choice of rental car and hotel anyway. so my out of pocket cost is essentially zero

Changes
 

Depends for each program.

I consider these all good use of miles (awards I have been able to get):

40K U.S.-Europe American Airlines Saver Y Award.
60K U.S. - Argentina American Airlines Saver Y Award.
90 U.S. - Delta Airlines Business Award.

I would say the Delta one is the most valuable not because of the miles/$$ value but just for the fact that I was able to REDEEM SkyMiles!