I’ve seen a few articles recently where the writer/blogger is putting a value on the mile or point for each program (ie, a Starwood point is worth 3 cents, or whatever). It certainly is helpful to have a rough value for each point earned, but unfortunately it’s not that simple. Why? Because frequent flyer miles have very little value when you only have a few, and a large amount of value as you acquire more. In other words, it’s the opposite of diminishing returns: the more you have, the more valuable they become.
If you have 4,000 miles on United, for example, those miles are redeemable for roughly nothing (a magazine subscription, perhaps?). On their own, their value is approximately $0. If that is the sum total of all of the miles you will accrue, you should not pay 1.5 cents each for them, as they are not worth $60 — you cannot exchange 4,000 miles for $60 worth of anything. At that level, those miles have no value at all.
However, if you want a trip to Europe in business class, and you have 96,000 miles already, those last 4,000 miles are the difference between flying in coach and having some miles left over, and flying in business class. Those last 4,000 miles have a bunch of value.
Miles are not the same as money – there are distinct awards you can buy with points — there is, perhaps, an 80,000 mile award and a 90,000 mile award. But if you have 80k miles and you get another 4,000 miles, but you’ll never earn any more miles, those 4,000 miles are worth zero. They are exchangeable for nothing.
Or look at it this way: 25,000 miles will get you a domestic coach ticket in the US — that’s probably a $400 value. US Airways will let you exchange 35,000 miles for a $900 (or so) ticket to Europe during January. Those 10,000 miles have a value of $500, while the first 10,000 miles have a value of roughly nothing. Those “top off” miles can absolutely be worth paying more for (which is why sometimes you are willing to pay an airline 3.5 cents a mile to buy the last couple of thousand miles to get you to an award — because those last miles are incredibly valuable).
My point: start with a travel goal. Have a trip in mind. You want to go to Hawaii in coach? Great. You know the ticket would cost roughly $800 or cost 40,000 miles. You should be willing to pay 2 cents a mile (or perhaps you’d be better off with a 2% cash back credit card).
I don’t believe you should ever buy miles in advance because you think they’re worth a certain amount. How you use the miles, and whether they’re incremental to miles you already have, will determine their value. Pick a trip, and earn to that trip. You’ll be happy when you’re sitting on a beach in Hawaii, instead of sitting at home with a giant pile of miles you’ll never use.