Cost/Benefit of transfering from Masters to PhD mid-program I am about 8 months into a Masters program. My advisor just asked me to consider transferring into a PhD program with him. If accepted, the work I have done towards my Masters would count towards the PhD. Also he said that if I struggle in the PhD it would still be possible to revert back to the Masters, so there seems to be very little risk. 

My end goal was always to work towards a PhD and often felt overwhelmed by the length of time and resources it would take. So this opportunity seems too good to be true? I get to skip 2 years of work and fast track towards my goal of PhD? Is it common to skip the Masters, or is this opportunity actually quiet valuable? I want to have a proper view of the costs and the benefits before making any decisions, so I am looking for views I am not considering. 

As an example of a perceived cost, I don't consider the institution I am at to be particularly well known/quality and assumed my choice of institution for my PhD would be much more important and I would go for more prestige. Is this a valid concern?
Whether it is "okay" to skip the Masters depends on your country and field. In US institutions in most scientific fields it is considered the norm to go directly from Bachelor's to PhD (of course many people get a MS along the way, too, but it's not necessary). In my experience, though, even in countries such as China where enrollment in a MS program is generally required to get accepted to a PhD program, once you get your terminal degree, nobody cares too much about what came beforehand. 

Regarding whether it's worth your time, this depends on what kind of offer you're considering. Is the advisor strong in their field (regardless of the prestige of your institution overall)? Could you expect to publish two or more "good" publications ("good" is a relative bar, of course)?

In general, my feeling has always been that as a student, it is easy to "trade up," i.e. go to a MS program stronger than your BS program. Do a postdoc somewhere stronger than your PhD institution. However, once you leave the student/trainee portion of your career, in academia you are more likely to have to "trade down." The MIT and Stanford grads are enough to take most of the top faculty positions in any field in a given year. Therefore, if you want an academic career, you may put more emphasis on prestige. 

If you aim for corporate work after graduation, then being at a "better" institution will probably open you up to a better network of alumni who could help you navigate to a good entry level job that fits your skills, setting you up better for future success.

Trading those away would be worthwhile if you really felt that this position was (a) likely to give you academic output that could compensate for the potential future networking loss, or (b) if you felt like this was the best offer you were going to get, or were unsure about the possibility of future offers (i.e. a bird in the hand is worth two in the bush).