How much are your points worth?

[Pixie_Dust]

When we joined the DVC, the rule of thumb was to consider each point worth $10 when calculating how much you were spending. That meant that when you figured the total cost of buying your points, including annual dues, and then divided that cost by the number of years you owned the points and then divided by the number of points you own, that dollar amount per yearly point came to about $10.

Now that points cost more, plus there are higher dues and fewer years left (not to mention some people need to factor in interest costs if they finance), I wondered if the consensus on the boards was to calculate at a higher number now, or if people still use $10 because it is easier to take the number of points you are spending, slap a zero on the end of that number, and see approximately how much you paid. A lot of times the cost per night comes up as more with points than we would pay for available cash rates.

The reason I am asking is that I was talking to Member Services about the Concierge Collection, which has a $95 fee per transaction on top of the points, and for the Plaza in NY that could be almost $1000 for a night! And she was saying that was less than their cash rates, because she did not believe DVC members paid $10 (or more) each for our yearly points! And she said, "I'm sorry you feel that way." It is not a matter of feelings or beliefs, but of calculations and facts, but I did not try to explain that to her. If I had challenged her erroneous beliefs and made her do the math, that would have put a damper on her day, lol

 

[Doctor P]

The VALUE and COST of points are different, IMHO. The cost of points currently every where except SSR is $89 per point. Divide that by 37 years, that is a little less than $2.50 per point upfront cost. Add the maintenance fees of, say, $4.50 per point, and that gets you to a total of $7.00 per point cost. Some will argue that you need to add in the time value of money, etc., but it actually is not necessary to do so for reasons that I will not bore you with for the type of calculation you are talking about. Now, the VALUE of points, and perhaps the opportunity cost in terms of what you could rent them for, is considerably higher and probably is at least $10 per point if not a little higher.

 

[Ralph&Pam]

Originally posted by Pixie_Dust
When we joined the DVC, the rule of thumb was to consider each point worth $10 when calculating how much you were spending. That meant that when you figured the total cost of buying your points, including annual dues, and then divided that cost by the number of years you owned the points and then divided by the number of points you own, that dollar amount per yearly point came to about $10.

...snip...

I don't think that the $10/point figure was ever based on the logic you present here. Rather, it has been a typical rental rate, so it reflected the amount one might be able to get by renting out points and using cash to pay for a cruise or a vacation at a different location than DVC. The typical point value for non-DVC stays arranged through member services has usually been around $5/point. Sometimes less.

Our actual cost of points at the time of purchase divided by the number of years left on the right to use contract at that time was only about $1.66 per point per year. Add the annual dues at about $4 per point per year, and our annual cost is less that $6 per point per year. Even with the higher dues and allowing for the forgone income from the money tied up in the purchase, it would be difficult to justify a cost per point per year of more than about $7.

If I were buying SSR today at $95 per point and were to consider the greater number of years remaining on SSR contracts, the cost of points plus annual dues is still sitting in the $6-$7 per point per year range rather than $10.

Ralph

 

[Granny]

Originally posted by Pixie_Dust

(snip)Now that points cost more, plus there are higher dues and fewer years left (not to mention some people need to factor in interest costs if they finance), I wondered if the consensus on the boards was to calculate at a higher number now, (snip)

If anything, the fewer years remaining would make the value of points go down, not up.

You can't take the original payment price for points and re-calculate dividing by one less year as each year passes. You should take the purchase price divided by the amount of years remaining when you purchased, and that figure is constant in all subsequent annual calculations.

 

[JVSJr]

I know this has been discussed in the past but let me give you my view on point value:

By renting points at $10 pp, a renter can get into the following Boardwalk accomodations at the following rates (compared to rack rates) Regular season. *It would be even cheaper for the renter if I calculated this on standard points.


............Rack....Points/($ saved).....Wkend Pts./($ saved)
Studio...284.....120 / (209).............230 / (54)
1 Bdr.....435.....240 / (195).............470 / +35
2. Bdr....705.....320 / (385).............610 / (95)
GV.........1510...790 / (720).............960 / (550)