How To Calculate Average Sales
No matter what industry you’re in, any sector that deals with customers will have to keep track of their sales. When you need a quick way to monitor your company’s success in meeting objectives, sales provide one of the easiest metrics since it is a direct display of efficiency related to profits. Even so, raw sales data can be overwhelming and may not always paint the clearest picture.
Using average sales across different periods can give you a better idea of how well your sales strategies and marketing campaigns are performing, which tactics are connecting with consumers, and how successful your sales team is at converting leads. More importantly, it gives you a straightforward way to establish a standard for measuring success and failure. Calculating average sales is an uncomplicated process and can help steer your business decisions for greater success.
Why measure average sales?
More than just an eagle’s eye view of your sales operations, average sales can also give you a granular view at the results of every sale. Measuring average sales by customer can deliver useful insights such as how many dollars customers are spending at the point of sale, and how that data compares to historical data.
On a broader level, you can compare the efficiency of different teams, stores, and branches by measuring their monthly and daily sales against historic averages and each other. This is important when choosing how to allocate budgets, deciding where to trim resources, and providing greater support. By understanding the historic patterns and combining them with more real-time data, you can make smarter decisions regarding your sales pipeline.
How to calculate average sales
Calculating your average sales depends on two factors: a period or frequency you want to analyze and the total sales value for that period. Average sales can be measured on a much smaller scale, such as daily or weekly, or on a larger scale like monthly and even annually.
To calculate the average sales over your chosen period, you can simply find the total value of all sales orders in the chosen timeframe and divide by the intervals. For example, you can calculate average sales per month by taking the value of sales over a year and dividing by 12 (the number of months in the year). If the total sales for the year were $ 1,000,000, monthly sales would be calculated as follows:
Average sales per month, in this case, would be roughly $ 83,000.
Daily average sales are also a common calculation, and they can vary based on the broader timeframe being measured. For example, you could measure daily average sales over a period of a single month to compare year-over-year data or calculate daily average sales over a full year to see how stores and sales teams performed throughout a 12-month period. In this case, the calculation would not change, except for replacing the top number for annual total sales, and dividing by the total number of workdays.
A variant average sales calculation
Another useful way to track the average value of a sale is to measure how effective your sales team is on a per-customer basis. While overall visitors and the number of sales may be on the rise, if the value of sales per customer is declining, your overall revenues may actually fall.
In this case, the division is similar to average sales, but instead of a time frame, you can divide the total sales value by the number of transactions completed during the period you are analyzing. For instance, if your total sales for the day were $ 15,000, and you completed 35 unique transactions, the average value of sales would be approximately $ 528 per customer. The formula to calculate average sales value is as follows:
Other KPIs you can include
Average sales are a great place to start tracking your sales effort, but to gain more actionable insights, your dashboard should also include other KPIs that can provide useful context. These are just a few of the useful sales dashboard examples of KPIs you can include when building your BI platform.
- Average Revenue Per Unit (ARPU) — This metric is like average sale value but measures how much revenue a single customer or user will generate. This number is found by measuring revenue against the total number of units.
- Sales per Rep — Average sales don’t give you a look into how individual salespeople may be performing. Adding sales per rep will provide a more granular look at your sales operations.
- Opex to Sales — Raw sales data provides insight, but little context. Understanding how operating expenses relate to sales helps clarify the real value of a sale. If the Opex is too high, even large sales offer little real value.
Looking for other ways to measure your sales numbers? Explore our interactive sales dashboards!