It's a very simple and obvious equivalence - but, somehow, many FPL managers seem to overlook it.
Some of the most important implications of this are:
1) It is wasteful to leave any budget unspent (especially at the start of the season)
You may sometimes want to keep just a little in hand (half a million or a million, say) to facilitate a planned transfer in a week or two. But you need to be careful not to do that too often - because it is potentially costing you points. 1 million pounds should be worth about 0.75 points per week. [I'll get to that calculation a little later...down at the botom of the post.]
2) Leaving premium-price players on your bench can be very costly
If someone just has a slight knock (or a - hopefully! - brief dip in form, or a suspension), you might not want to waste transfers moving them out of your squad and then back in again within a short timeframe. But leaving a high-price player unused, for more than a week or two, can damage your points return. Leaving Haaland, for example, on the bench for a month because of injury, or Salah because of AFCON (every other year) is a big risk.
Based on the above ideal points-per-pound value, you might theoretically be bleeding 8 or 10 pts per week if you do that. In fact, it's not quite that bad, because at least some of your bench places are redundnant; you can afford to leave one or two slots empty because you'll hardly ever use them - and thus they have no direct value. In fact, you're only measuring the difference in price between your unused premium player on the bench and the player you're replacing him with in the starting eleven. (And because premium-price players tend to have low points-per-pound returns anyway, the drop in points might not be as bad as all that.)
You may well have what you think is reasonable back-up for your missing 'star' - maybe even the best available alternative - without needing to spend money and use a transfer (so, you might not be suffering any avoidable points loss at all; but it is a danger you should be wary of). And transfers themselves have a value, which you don't want to 'spend' unless you have to....
3) Transfers also have a points value (and hence a pounds-equivalent value)
The FPL gnomes price additional transfers at 4 points each. And they're pretty shrewd about the game's dynamics: they want to make you think twice about paying points for an extra transfer. (Although, you hope to get at least 5 or 6 points per game - on average - from all of your starting players; so, actually a transfer should be worth rather more than that.)
Hence, it is reasonable to apply that same points-value to your Free Transfers. The FTs are extremely useful: they can strengthen your squad and increase your points return. And you really don't want to be caught without one (or two - or even more this year, since we're now allowed to hoard up to 5 at one time) when a sudden need arises to replace someone. So, keep in mind that nominal points value - and don't use them frivolously.
And if you can get 6 points in the next game from a player you've transferred in, that is equivalent to an optimum use of 8 million of your budget (as against a zero use, if you're replacing someone who's out injured).
4) The points-per-pound return from your squad is of paramount importance (but it's not everything)
Now, in theory, you should be able to assemble an optimally successful squad by picking all the players with the highest 'Value (season)' figures on the FPL stats page. (Keep in mind that at the start of the new football year, this stat is using last season's points returns divided by this season's prices. So, it's useful for assessing a player's likely value this year, but doesn't show how good they were on this metric last year.)
In practice, it's not quite that simple because... for one thing, that probably wouldn't use up all your budget! You also need to make sure you're getting the highest overall points-scorers (with the best points-per-pound returns) that you can afford.
But then there's a further complication. The size of a player's overall points haul, their differential advantage (their excess of points over the next best player, and over the average 'good score' for their position and/or price category), their reliability of returns (how confident can you be that they will again return somewhere near their theoretical best?), and their consistency over the season (how many blank spells might you have to suffer with them?) are all factors which can justify spending a huge sum on a Haaland or a Salah.... even though their points-per-pound returns are very poor.
An effective squad usually contains a number of the highest total points-scorers (even if some of them represent very poor points-per-pound value), balanced with several cheaper players who offer excellent points-per-pound.
5) You need to pay attention to boosting, or at least maintaining squad value
A lot of people dismiss squad value as an 'irrelevance', and disdain to take any notice of it. It's perhaps got a bad reputation in the FPL community because there is a bizarre side-game where a small minority of players focus all their attention on transfer trading, trying to grow squad value rather than earn points.
However, squad value is important because it translates directly into your points potential. If you can grow your squad value by 4 or 5 million over the opening months of the season, you give yourself the opportunity to bring in one or two more premium players that you couldn't initially afford, and that should boost your points returns.
It may be getting harder now to achieve these sorts of profits. (I believe the algorthms have been heavily tweaked over the last year or two, and price change thresholds seem to be reached very rarely now, compared to a few years back. Almost all of my overall gain in squad value last year came from Cole Palmer - who remained a strictly paper 'profit', since I didn't want to cash him in to try to upgrade other positions!) But you should still be wary of shrinking squad value. Players who pick up a serious injury, or fall out of favour with their gaffer, or suffer a serious slump in form.... need to be jettisoned very promptly (before a general sell-off triggers a price dip).
And finally.... THE FUNDAMENTAL CALCULATION:
You get a 100-million pound budget at the start of the season. You have to spend at least 17 million on your bench (some might spend a little more).
You might grow your squad value by 5 million pounds or more over the season. But then again, you might not (as I just noted above, the game dynamics seem to have shifted recently towards making it much more difficult to generate any significant profit on transfer trading). And most of that growth in value might be spent on bolstering an initially weak or half-empty bench, or simply tied up in a player you don't want to sell. There's unlikely to be a major change in the effective value of your starting eleven over the season, probably not more than a few million, at best.
Hence, it's reasonable to suppose that the value of your starting eleven across most of the season is a little over 80 million.
In recent years, the global leaders have regularly been getting over 2.600 points, and occasionally 2,700+ or even 2,800+. And it is widely accepted that 2,500 points is an excellent score that we should all strive for....
Sure, you can in theory get double points for one of your best players through judicious use of captaincy picks - but, in practice, you have to be very lucky to get more than about a 10% boost on your basic team score from that; and usually it's a lot less than 10%.
That means you really want to be earning very nearly 30 points across the season for every million pounds invested in that starting eleven.
And that translates to a little over 0.75 points per million per week... It really is worth keeping that in mind. (Although, in practice, you should settle for a little bit less than that - because those sorts of numbers would get you up around the very top of the global rankings, an unreasonable thing to aim at.)
[Momentous revelation: Almost NO PLAYER ever breaches that 30-points-per-million-of-cost number, and only a handful get anywhere near it. You cannot achieve a top-of-the-rankings score with a stable squad; you have to be constantly rotating the most in-form players in and out to try to maximise your returns.... so that the average returns for each slot in your squad are greater than the average returns produced by any one player over the season.]