Guides · What is "Effective Cost"?
An award is priced in miles; a cash fare is priced in dollars. Effective Cost puts the award in dollars too, so you can actually compare the two.
A 95,000-mile Business award flight feels free. It isn't: those miles took real money, spend, or time to earn, and you could have spent them on a different trip. Effective Cost is what the award actually costs you: your miles valued at your own rate, plus the taxes and fees you still pay in cash.
"Value per point" is the cents-per-mile figure from your profile. Until you set your own, it's our per-program default (e.g. ~1.5¢ for many programs). You can see and change it in your valuations.
Say a business-class award is 95,000 miles + $5.60 in taxes, and you value that program's miles at 1.5¢ each:
Now it's comparable. That same route sells for a $1,650 cash fare, and the award's effective cost is $1,431. So at the default 1.5¢, booking with points is the better deal, about $220 cheaper than cash. That's Effective Cost doing its job: the award isn't literally "free," but priced honestly it still wins here. (Hold that thought.)
Every program ships with a default valuation, our starting estimate of what a point is worth (very roughly 1.2–1.5¢ for most currencies). It's a reasonable stand-in until you tell us better. But the honest number is personal: a point is worth what you can reliably get out of it. Set your own valuation and every Effective Cost re-prices to your reality. A point you value higher will make its award look more expensive (because to you, spending it costs more).
Watch it happen on the award from above. At the default 1.5¢ its Effective Cost was $1,431. Now say you value that program's points at 2.0¢, because they also get you Hyatt and United. Same award, same taxes:
Nothing about the flight changed. Your points are simply worth more to you, so spending them costs more, and the Effective Cost climbs by ~$475. And that flips the decision. At the default 1.5¢ the award won ($1,431 beat the $1,650 cash fare); at your 2.0¢ valuation it effectively costs $1,906, now more than paying cash. Your valuation alone turned "use points" into "pay cash."
Why do two people value the same point differently? A few common reasons, and they rarely act alone:
This is why the order you'd spend points matters. Say both Chase and Capital One transfer to Virgin Atlantic for the same award. If you value Capital One at 1.7¢ and Chase at 2.0¢ (because Chase also gets you Hyatt and United), you'd rather spend Capital One first and protect your Chase points. AwardWise reflects exactly that: your valuations drive both the Effective Cost you see and the cheapest-first transfer order in the funding plan.
This is the part worth reading twice. The Effective Cost figure on a result row is a valuation of the award, computed from your cents-per-point. It is not a cash price we found for that flight. AwardWise uses the default valuation until you set your own; the rate behind the number is always one you can see and change in your Wallet.
The actual cash prices live in the Cash and Award vs Cash tabs, and those come from a live fare search. So a row can show a $1,431 Effective Cost and the Cash tab can show a different real fare; they answer different questions. See Award vs cash: points or cash? for the side-by-side.
No invented numbers. Effective Cost uses only the miles and taxes on the result plus a valuation you can see and change; when a value is unknown, the row shows "—" rather than a guess. Your valuation is yours. Set it to what a point is really worth to you and every Effective Cost re-prices accordingly.
See Effective Cost on a real search →