Use the Points Purchase Calculator to find cost per point, redemption value, value surplus, and the maximum safe price to pay for purchased points or miles.
Points Purchase Formula
When a program sells points with a bonus, first calculate the total points received:
Total Points = Base Points * (1 + Bonus % / 100)
The all-in acquisition cost per point is:
Cost per Point (cents) = (Purchase Price + Fees) / Total Points * 100
Estimated redemption value and modeled surplus are:
Redemption Value = Total Points * Target CPP / 100 Value Surplus = Redemption Value - Award Fees - Acquisition Cost
To find a maximum purchase price while preserving a safety margin:
Maximum All-In Cost = (Redemption Value - Award Fees) * (1 - Margin % / 100)
Variables:
- Bonus % is the extra points added to the base purchase
- CPP is the expected redemption value in cents per point
- Fees include purchase tax, processing charges, or other acquisition costs
- Award Fees are cash charges paid when redeeming the points
- Margin is the value cushion required between expected value and acquisition cost
A points purchase can look attractive at a low acquisition cost but still be poor value when award availability is limited, taxes are high, or the program changes its pricing. Use a redemption you can realistically book and include every cash fee.
Cost of Buying Points
The value column shows the estimated value of 10,000 points and 50,000 points when each point is worth 1.5 cents.
| Acquisition cost | Cost for 10,000 points | Cost for 50,000 points | Value at 1.5¢ each |
|---|---|---|---|
| 0.75¢ per point | $75 | $375 | $150 / $750 |
| 1.00¢ per point | $100 | $500 | $150 / $750 |
| 1.25¢ per point | $125 | $625 | $150 / $750 |
| 1.50¢ per point | $150 | $750 | $150 / $750 |
| 2.00¢ per point | $200 | $1,000 | $150 / $750 |
Example Problems
Example 1: Evaluate a bonus sale.
You buy 50,000 points with a 25% bonus for $750 and no purchase fee. You receive 62,500 points. The acquisition cost is $750 / 62,500 * 100 = 1.20 cents per point. At an expected value of 1.5 cents each, the points are worth $937.50 before award fees, creating a modeled value surplus of $187.50.
Example 2: Set a maximum price.
You expect 60,000 points to be worth 1.4 cents each, or $840. Award fees are $40, leaving $800 of usable value. With a required 20% margin, the maximum all-in acquisition cost is $800 * 80% = $640. If the seller charges $15 in fees, the advertised price should be no more than $625.
Frequently Asked Questions
Is it worth buying points?
Buying points can make sense for a specific near-term redemption when the all-in acquisition cost is clearly below the value you will receive. It is usually riskier to buy points speculatively because programs can devalue points or restrict award availability.
Should bonus points be included in cost per point?
Yes. Divide the entire cash cost by all points received, including the promotional bonus. Excluding the bonus would overstate the acquisition cost and misrepresent the offer.
Why use a safety margin?
A margin protects against uncertain point values, award fees, cancellations, and program changes. Paying exactly your estimated value leaves no cushion if the redemption becomes less valuable than expected.
