In Finance, what is an Average Ticket?

The term average ticket can be used in two different financial settings. As it relates to the use of credit cards, an average ticket has to do with the average size of individual sales that a credit card business realizes from credit card usage by customers. In investment circles, an average ticket can refer to either the size of trades executed for an individual customer, or the total trades conducted by a broker or dealer within a specified time frame. In both settings, the idea behind the ticket is to measure the level of profitability that is achieved with the transaction process, allowing for any costs associated with the transactions.

Calculating an average ticket begins by determining the time frame that will be used to identify the average for increments within that larger period. For example, if the goal is to identify the average ticket related to each month within a calendar year, the process will begin by totaling the amounts of individual tickets for the entire year. That figure is then divided by twelve, making it possible to determine the average monthly ticket that applied to that particular twelve-month period.

When the average ticket has to do with credit card transactions, the figure is sometimes referred to as an average draft. Here, the purpose is to take into consideration any fees that are collected from customers who accept payments via credit cards, as well as any interest that is charged on the balances of those credit card accounts. This provides the credit card provider with data regarding the amount of profit generated by transactions for the time frame that is under consideration.

Credit card merchants also sometimes make use of the fact that calculating the average ticket helps to indirectly identify the current range of interchange fees that may be charged by various banks involved in the transactions. This can go a long way toward making sure the fee structure is competitive with the fees charged by other credit card vendors, while still yielding an equitable return for the service. The process can also help to identify the impact of any new types of interbank fees that may have come into use during the more recently completed calendar year, and determine the degree of impact those fees had on overall profits.

Brokers and dealers also use this model to determine profits generated by transactions executed on behalf of clients. This is done by totaling the transactions for the calendar year, then dividing the total by twelve, allowing for any fees assessed for executing the orders. The end result is an average ticket return for the month that can further be broken down to identify the average ticket for each transaction conducted for a investor. Information of this type gives the firm a good idea of the amount of average profit that is generated off each single transaction, as well as the profit realized on a monthly basis.