Almost every mistake in the miles world comes from one confusion: treating "the value of a mile" as a single number. There are actually two values, and knowing the difference is what separates real savers from people who only think they save. This is the reference article on the concept; if you're just starting, read how to get started with miles first.
The two calculations: acquisition cost vs redemption value
| Calculation | Question it answers | Formula |
|---|---|---|
| Cost per thousand miles | How much did each thousand miles cost me? | (amount paid ÷ miles obtained) × 1,000 |
| Redemption value per thousand | How much did each thousand miles save me on this ticket? | ((cash price − taxes) ÷ miles used) × 1,000 |
The golden rule is to compare the two: a redemption only pays off when the redemption value is higher than the acquisition cost. Got miles at $18 per thousand and redeeming at $30? Great deal. Redeeming at $12? You're burning miles — better to pay cash and keep them.
Calculation 1: acquisition cost
Example — direct purchase
You buy 50,000 miles for $900 on a promo. Cost = (900 ÷ 50,000) × 1,000 = $18 per thousand.
Example — transfer bonus
You have 30,000 points and a 100% bonus appears: it becomes 60,000 miles. If each thousand points "cost" you $20 to accumulate, you paid $600 for 60,000 miles → cost = (600 ÷ 60,000) × 1,000 = $10. The bonus halves the cost — that's why you never transfer without a bonus.
Calculation 2: redemption value
Always subtract the taxes — they're paid in cash and can't count as savings.
Example — worthwhile redemption
Round trip: $980 cash or 25,000 miles + $90 taxes. Value = (980 − 90) ÷ 25,000 × 1,000 = $35.60. If your miles cost $18, the redemption nearly doubles the value — excellent.
Example — a redemption that does NOT pay off
Promo flight: $240 cash or 18,000 miles + $70 taxes. Value = (240 − 70) ÷ 18,000 × 1,000 = $9.40. Below cost — pay cash and keep the miles.
The decision rule
- Work out the cost per thousand of your miles.
- Before redeeming, work out the redemption value (taxes subtracted).
- Redeem when the redemption value is clearly higher than the cost.
- When in doubt, check the Miles Calculator.
- Only buy miles when you already have a redemption worth more than the purchase cost — see when buying miles is worth it.
💡 Summary: there are two values — what you pay (cost) and what the ticket returns (redemption value). Redeem when the second beats the first, always subtracting taxes. This single calculation settles 90% of miles decisions.