Given that I don’t really need any new clothes, I figured that I would sit out this promotion. This morning however, a FFU reader asked me if I had any thoughts on how to maximize this deal so I thought I’d share my analysis.
Typically with these types of promotions that give you bonus miles for making purchases, it is best to have a well thought-out plan so you don’t end up wasting money.
Risk / Benefit Ratio
The absolute first thing I look at whenever there is any type of mileage deal is “How Much Will This Cost Me If I Mess It Up”? While it is extremely easy to get caught up in these types of promotion and go completely overboard, you always have to factor in the cost of something going wrong. Risking $1,00 to earn 36,000 miles isn’t really a worthwhile bet especially when you are dealing with shadow affiliate programs like Cartera.
Luckily for this deal, the retailer is Nordstrom and as TPG has pointed out, they have free returns and free shipping on all items. So if for some reason the points don’t post properly, you can always return the items free of charge!
Therefore the risk for this deal is almost non-existent!
The next step is to find a product that maximizes your points haul while also having a high resale value.
Clothes typically do not have a very high resale value, so I wouldn’t recommend buying a $5,000 Gucci suit from Nordstrom and then trying to find someone to pass that off on.
Unfortunately, Nordstrom doesn’t sell Apple products or obviously that would be an excellent item to resell.
While perusing Nordstrom.com, I did notice that they do sell Beats By Dre headphones. I will spare giving you a brief history of 90’s West Coast rap, but what you need to know is that these headphones are extremely popular! If you watched the Super Bowl, during the half-time show, LMFAO was sporting a $1,000,000 pair of these headphones. Also, after the Patriots officially made it into the Super Bowl, Chad “Ochocinco” bought 70 pairs for these headphones for the entire Patriots team for a cool $28,000. If only Ochocinco had waited and read this post, he could have netted 1,008,000 British Airway miles!
After picking out your item that you think could maximize your mileage, it is time to test your hypothesis.
Ultimately the best way to get the most money back on your purchase is to either purchase items for other people and have them pay you back, or purchase items and re-sell them for as close to the purchase price as possible.
While everyone might not have friends that want to buy Beats By Dre from you, it really depends on the product you are purchasing. Simply replace the “headphones” with UGGs, Tom’s Shoes, Christian Louboutin shoes, etc and you get the point.
While Craigslist gets a terrible wrap for being the home of a surprisingly large number of deposed African Kings, the benefit of Craigslist is that there are no listing or transaction fees. I took a look on Craigslist Chicago and it seems these headphones are going for about $200-$250. Since the headphones you are buying are brand new, sealed, and you have a receipt to show the items aren’t stolen, you should be able to command a premium on Craigslist. Remember there are a lot of scams on Craigslist, so never accept checks or offer to ship your item anywhere!
While eBay does have listing fees and final value fees, listing on eBay can get your item in front of a worldwide audience. With eBay you can even check the ending price of prior auctions, so you can see how much money you can expect to get. Looking at the Completed Listings, brand new, sealed, Beats By Dre headphones go for around $225-$250. Another neat thing about eBay is that you can list your item in foreign countries where the exchange rate is favorable. From my experiences selling on eBay, these types of international buyers are more willing to pay a premium for tech items than their American counterparts because paying you full price is still cheaper than buying the item in their home country. Don’t believe me? Just Google how much a iPhone 4 costs in China.
Estimate Your Return
After you have a good estimate of your expenses and how much to can expect to earn back, it is time to calculate your return on investment.
If you bought 1 set of headphones at $300 X 36 miles per $1 spent = 10,800 miles earned. Your Cost Per Mile (CPM) would be .027 cents.
If you sold those headphones on Craigslist for $225, you would net $225.
$300 cost of headphones – $225 sale on Craigslist = net loss of $75 + 10,800 Avios miles.
Total Cost Per Mile = $75 loss / 10,800 Avios gained = .0069 cents per a mile.
Obviously if you can sell the headphones or whatever item you purchase for more money, your CPM dramatically decreases.
Even at a $75 loss per a pair of headphones, your Cost Per Mile is still below 1 cent, which is the golden number most people try to get below when partaking in these types of promotions.
In the event that you buy a bunch of headphones and you can’t sell them, remember you always have the option of returning them for free!
After looking at the full scope of this promotion, taking in the risks, benefits, and costs, this deal should allow you to “buy” Avios miles at less than 1 cent per a mile if you follow the general instructions above.
Although I was hesitant when first looking at this promotion because I thought it only applied to clothes, I now think I am going to listen to my own advice and jump in on this great deal!
Let me know if you have any questions!