Average Revenue

Average revenue tells you how much revenue is earned per unit sold. It is found by dividing total revenue by the number of units sold, so it works as a "per item" measure of sales performance. In a single-price market, every unit sells for the same price, so average revenue is the same as the price per unit.

Use this formula when you want to compare sales performance across different time periods, products, or branches. It is especially useful in pricing and revenue analysis when you know total sales revenue and the number of units sold.

• Using the number of customers instead of the number of units sold
• Forgetting that total revenue must be divided, not multiplied
• Assuming average revenue always equals price when discounts or different prices are involved