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Average Selling Price

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What is the Average Selling Price?

By definition, an average selling price (hereby mentioned as ASP) is the price for a product or service in various markets and is usually used in the retail and technology industries.

In the world of marketing, when you first set up a business, you look at what your competitors are doing, maintain the legal aspects of your industry, calculate your personal and business finances and complete a whole master list of things to do.

And under your business finances, you consider your fixed and variable costs. 

Under still which, you learn about your average selling price. 

The average price of a product or service is determined based on the average cost of production, along with a company markup. Your ASP should cover the payment of all the costs of the product and operating expenses and still allow you to obtain a profit. To cut a (not yet) long story short, you’re always aiming to make a profit. Otherwise, your business won’t grow.

It is no surprise that even though most companies depend on user acquisition for business, the slightest change in their ASP can drastically alter business. It also plays a large part in making your crucial sales performance metrics.

How do I calculate my Average Selling Price?

Easy. Calculate the total revenue earned from your product and divide it by the number of products or services sold.

For instance, take into account all of the Maths problems we solved in 6th grade. If the average selling price of 15 books is ₹234, what is the total selling price? The answer is 3510. 

This is just that but reverse.

It’s as simple as that.

And to top it all, you don’t need fancy tools to calculate your ASP, a simple excel sheet will do just fine. 

How do you increase the Average Selling Price?

Of course, the Average Selling Price of a product largely depends on multiple factors, including but not limited to the following:

  1. Trends in the market
  2. Demand and supply 
  3. Economy prices
  4. Competiton prices
  5. Legal/government regulations, amongst others

But what if you want to launch a new product and determine the perfect ASP for it without making it too expensive for your users to obtain and without tanking your business? Use the same formula. 

Calculate your product cost (which, if you deal with wholesale, will be a lot cheaper for you), add in the profit margin, and see how it can typically complement your existing product range. 

Let’s continue with the examples of books. Say you have a beautiful leather covering that goes with all your books, a new pen to write in it with, and a bag to seal the deal.

₹500 for the leather, ₹20 for the pen, and ₹100 for the bag, into 1000, 2000, and 3000 units, respectively, can give you an average selling price of ₹140. Add in your desired markup percentage; voila, you’re happy, the company’s happy, and the customers are happy. 

Or, if you don’t wish to do all of this, simply create larger packs of your current product.

For example, selling a 200g pack of soap could also launch a 300g or even 500g version. Alternatively, a 200g chocolate bar could use a bigger 500g pack or even an 800g version of it. 

Before you leave, here are some quick tips to best use your ASP.

  1. Have a strategy that you think will work best for your brand, and stick to it. It’s easy to be swayed by competition and market trends, but some things just work best in the long run.
  2. Your product is not determined by one transaction. Even if you’re starting small, look at the whole picture, not just what you see in front of you right now. Price wisely.
  3. Think value. Every customer loves being valued and satisfied. 
  4. Create pricing plans for all your products. A one-size-fits-all approach may not work for you in the fullness of time. Learn to improvise, adapt, and overcome when and where you can.


Your ASP is fundamental in determining how your business works. 

Your business growth and sales reports are all driven by the way you calculate the total revenue earned from your product and divide it by the number of products or services sold. And conclusively, you can do all of it within the range of a simple excel spreadsheet.

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