Thread: How to calculate Weighted Average for price increase/decrease

1. How to calculate Weighted Average for price increase/decrease

Hello,
I have been asked recently by my manager to provide some analysis to the average price increase/decrease for our products. He mentioned that I need to use weighted average.

I am comparing the percentage of a price increase/decrease for 5 products during Jan 2007 & Jan 2008. My aim is to find the weighted average for the % of the price increase/decrease.
I have been told that weighted average is calculated using a different method and I am not sure how to do that.
I hope you can explain to me how weighted average is cacluated. Thank you
I have simply used the following method : Sum(13%,12.5%,-18.18%,0%,-3.85%)/5 = 0.69%

Please refer to the attached file for the example. Also note that my real life file consist of about 1000 products.

2. Didn't we just do this one?

Double posting is discouraged.

3. Are you comparing different products?

For example: PRODUCT PRICE LAST CHANGE (% or not) VOLUME

A 10 -1 100
B 15 +2 200
C 35 +1 50

You can weight each price change by price or by volume (I would use the volume). This would be:

BY PRICE:

[10*(-1)+15*(+2)+35*(+1)]/[10+15+35] = ...

This is rather odd because the higher the price, the higher the weight. And you do not measure importance by price.

BY VOLUME

[100*(-1)+200*(+2)+50*(+1)]/[100+200+50] = ...

This is correct. The total price change is related to the amounts of each product in stock.

Hope this helps!

Federico.

4. I didn't know it has been solved before. Sorry.
Bye,

Federico.