What is Weighted Average in MikesBikes?

MikesBikes Question of the Week: What does “Weighted Average” mean?

Market Summary Report in MikesBikes

It is the average Price / Awareness / PR / Distribution / Quality index weighted by the volume of demand for each product.

We use a weighted average to give a better indication of the overall level of value for consumers.

For instance, if you have two products A and B with A priced at $100 and B at $50, then the average price of those two products is $75, ie. ($100 + $50) / 2 = $75).

But for the weighted average we look at the amount of demand for each product.

If A had 100 units of demand and B had ten times as much demand (1,000 units) then the weighted average price would then be:

(100 * $100 per unit + 1000 * $50 per unit) / 1100 units = $54.55

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