Redeeming points and miles for flights and hotels can be a bit of an art, with the ultimate question being whether or not a redemption is a good deal.

There are many views on what makes a particular redemption a good one, but one way to approach the issue is by taking a qualitative approach using math.

In short, with every redemption, you are getting a certain monetary value for each point. It is in your interest to maximize the value you get out of each point.

There is a simple way to calculate the point value for each redemption option you have. You can take that value and compare it with valuations set by experts to see if you are getting a good deal. Here’s how it works.

## The Basics: What You Need

To start, you need to know that the unit of measurement we are using is **cents per point**. If you are in Canada, be sure to convert your dollar values to or from US Dollars if needed.

You will need the following numbers to do the calculation:

The number of points required for the redemption in question

The amount of additional taxes and fees that you will have to pay out of pocket for the redemption – you can usually see this when going through the award redemption process

The cash price of the same flight/hotel booking – you will need to do a separate search to find out how much it would cost if you were to pay for it in cash

## The Calculation

Using those three numbers, perform the following calculation:

Take the cash price (#3 from the list above) and subtract the amount of taxes and fees that you would have to pay for the redemption (#2 above). This is the actual amount of money that you are saving by using your points.

Take that resulting dollar amount and divide it by the number of points required for the redemption (#1 above).

Multiply that number by 100.

This will give you the number of cents that you are getting per point.

## How Do You Know If It’s a Good Deal?

Now that you know what value you would be getting if you went ahead with the redemption, you can compare it with point valuations calculated by experts.

For pretty much every points and miles program out there, there are multiple sources that have estimated how much points are worth on average. You can find these by simply Googling “[Program name] points valuation.” Here are some examples: AwardWallet | One Mile at a Time | NerdWallet

You can compare the number that you have from your calculation with the published points valuation. If your number is larger, you are probably getting a good deal for your points.

If your number is smaller, you could probably get better value out of your points with a different redemption. This does not necessarily mean that you shouldn’t go through with the redemption though, as what makes a redemption a good one is up to you.

## The Formula

If you like formulas, the basic formula is:

Redemption Value = 100 x [(Cash Price – Award Redemption Taxes/Fees) / Award Price]

## An Example

Here is the flight redemption example discussed in Episode 4 of Flying Smarter:

Let’s say that you are trying to book a flight on American Airlines and it’s going to cost you 15,000 miles plus $25 in fees. You search for the same itinerary as if you were going to book it with cash and find out that it would cost you $175.

To find the value that you are getting from your points, you need to divide the value of what you are getting by the number of points. The value you are getting isn’t $175 though, because you would need to pay $25 in fees if you are booking in points. So you’ll need to subtract $25 from $175 to get $150, which is the actual amount that you are saving by using points.

Then, you can take $150 and divide it by the number of miles required, which is 15,000 and that gives you a value of $0.015. Multiply that by 100 and you get 1.5 cents per mile.

You can then do a quick Google search for “American Airlines points valuation” and you’ll find a number of travel sites out there that have calculated the approximate valuation of different points and miles currencies. In the case of American Airlines Advantage miles, you’ll find that they typically say that the valuation is around 1.4-1.6 cents per mile, meaning that this is a reasonably good redemption.