What is an Average Selling Price?
Average selling price refers to the approximate middle price that a particular good usually sells for, when comparing the price of the goods from many different sellers. The term can be used to describe stocks and investments or it can be used to describe consumer goods. Determining the average selling price can be a useful way to determine whether a given price is appropriate or not.
In order to calculate the average selling price, data on a number of different price points must be collected. The different prices then must be added together and divided by the number of samples. For example, to calculate the average sales price of a stock, it would be possible to add the selling price of the stock at the close of trading every day for 30 days, then divide by 30. To determine the average selling price of a camera, the best method would be to consult with a number of different sellers to find out what price tag they have on the camera and then divide by the number of sellers.
If the camera was selling for $100 US Dollars (USD) from two sellers, $150 USD from two sellers and $195 USD from one seller, then to calculate the average selling price it would be necessary to add $100 USD + $100 USD + $150 USD + $150 USD + $195 USD. This number — $695.00 USD — would then be divided by five, the total number of sellers, to get an average sales price of $139 USD.
The average sales price of a product tends to decline as a product becomes older or less in demand. Products that have special brand recognition or that are considered premium may have a higher average sales price than products considered less desirable. Brand awareness thus creates a premium on the average price of a particular good.
A store or salesperson can look at the average selling price of a particular item, and of similar goods, to set his own price for a given product. A consumer can look at this same number to determine whether he is being offered a good deal, a below average market price, or a bad price that is above market price.
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