Airlines and hotels offer upgrades at several points, priced differently at each, and the value varies enormously depending on when and how it is offered.
The bidding systems
Now widespread and worth understanding.
Passengers submit an offer for an upgrade, and the airline accepts or declines shortly before departure based on availability and the bids received.
The mechanics favour the airline substantially. They see all bids, know the availability, and accept whichever maximises revenue.
Minimum bids are set and are frequently well above what an empty seat is worth to the airline, since an unsold premium seat costs nothing to fly.
The practical approach, if participating, is to bid near the minimum rather than what you think the seat is worth, since the alternative for the airline is frequently zero.
The gate offer
Generally the best value available.
An upgrade offered at the gate is being sold at the last moment for a seat that will otherwise fly empty, and the price reflects that.
These are frequently a fraction of the bidding minimum and a small fraction of the fare difference.
They are unpredictable, cannot be planned for, and are worth accepting when offered on a long sector.
What the upgrade actually delivers
Worth being specific because the cabins differ enormously.
Premium economy is a better seat in the same class of experience — more space, better recline, sometimes better food. On a long flight it is a genuine improvement and it is not a flat bed.
Business class on a long-haul aircraft with a flat bed is a different product entirely.
Business class on a short-haul aircraft is frequently an economy seat with the adjacent seat blocked and a better meal, which is a considerably smaller upgrade than the name implies.
Which means the same nominal upgrade is worth very different amounts depending on the aircraft, and the aircraft type is visible when booking.
The hotel version
Different mechanics and a similar assessment.
Upgrades offered at check-in are priced per night and compound over a stay.
What is actually being offered varies — a higher floor, a better view, a larger room, or a suite — and the difference between these is substantial while the presentation frequently is not.
Asking specifically what differs, rather than accepting the category name, is the useful question.
And a view is worth considerably less than people pay for it, since the time spent looking at it is generally small.
When I actually pay
The situations where it has been worth it.
Long overnight sectors where the upgrade includes a flat bed.
Gate offers on any sector over several hours.
Hotel upgrades where the difference is space and I am working in the room.
And anything where a specific need is being addressed — extra legroom for somebody tall, a quieter room for somebody who will not sleep otherwise.
When it is not
Daytime short-haul flights, where the difference is a meal and an empty adjacent seat.
Anything bid at substantially above the minimum, since the airline is capturing the surplus.
Hotel upgrades to a view or a floor, which is the most commonly sold and least valuable.
And any upgrade bought at booking, where the price reflects anticipation rather than the marginal cost of an unsold seat.
The free route
Worth mentioning since it is the one that actually works.
Loyalty status generates upgrades at no cost, subject to availability, and for frequent travellers this is the main practical benefit of status.
Asking politely at check-in occasionally works and works considerably better when the property or flight is not full, when you are travelling alone, and when there is a reason.
Neither is reliable and both cost nothing, which is a better proposition than most of what is sold.
What to ask before accepting
Since the offer is generally made under time pressure.
Which aircraft and which cabin configuration, since the same cabin name covers very different products.
Whether the fare rules change, since an upgraded ticket occasionally carries different change and refund conditions.
Whether it affects earning, which on some carriers it does and not always favourably.
And whether baggage allowance changes, which is occasionally the most valuable part of the offer.
Downgrades
The reverse situation, which happens and is poorly understood.
Where an aircraft is substituted and a premium cabin is smaller, passengers are moved down, generally with compensation.
Statutory reimbursement of a proportion of the fare applies in some jurisdictions and is calculated by rules rather than by the airline's offer.
The initial offer is frequently below the statutory entitlement, which is worth checking rather than accepting, particularly on long sectors where the proportion is substantial.
The seat map
Worth checking before paying for anything, since position matters more than cabin on many aircraft.
Published seat maps with passenger-contributed notes identify seats with reduced recline, missing windows, proximity to galleys and lavatories, and misaligned windows.
A well-chosen economy seat is frequently better than a poorly positioned premium one, and the information is freely available.
Which means the first question is which seat rather than which cabin, and it costs nothing to answer.