A couple of days ago I had an interesting conversation that turned toward manufactured spending, with my friend, who runs the Facebook Group Travel Hacking 101.
He had shared the news about the AAdvantage program changes and asked the group whether that would lead to loyalty changes. He then followed up to say that he’ll continue to not pay for flights (I suspect, through using miles/points and cash back).
Always a cost to Manufactured Spending
My response was something to the point that there is always a cost. He ultimately responded that his only true cost was time. Time is definitely not free. There is always an opportunity cost. You could be out on the golf course, but instead you’re standing in line at Walmart. You could be working, and earning a higher per-hour rate, than you can generate via miles and points.
In Program Management, we generally measure three key programmatic metrics:
– Cost: how much did we think a program was going to cost, and how much it is trending to cost–although that may be overly simplistic.
– Schedule: how long did we think the program would take, and how long is the program trending toward taking based on delays and early completed tasks.
– Performance: is the program doing what we said it would do, is it meeting the desired goals at the start of the program.
To draw the corollary to the manufactured spending points and miles game:
– Cost = out of pocket cost + time (aka how much you value your time)
– Schedule = how long do you think it will take for you to do all the steps necessary to manufactured spending, and how long did it really take you (because there is a cost to that time)
– Performance = the result of those points and miles you generated, this is impacted by internal (ability to maximize/utilize the points), and external (devaluations, award space limitations) factors.
Really my basic point is – despite all the discussions of free, nothing truly is. Normally we talk about opportunity costs, but if you just take the basic view that your time is worth some amount of money–e.g. your hourly rate, or salary broken down to an hourly rate–then manufacturing spending in turn has a cost, even if you pay yourself back with cashback; unless you’re generating so much cashback, that you can replace your hourly rate, in which case, maybe you should just manufacture spend for a living.