Weighted average cost: Why Larger Purchases Change the Average More
A quantity-weighted cost reflects how many units were bought at each price. A small expensive purchase should not have the same influence as a much larger inexpensive purchase.
Use the Weighted average cost Calculator to enter your own figures and compare the result with the worked example below.
Weighted average cost formula
Average = Σ(quantity_i×price_i) ÷ Σ(quantity_i)
Worked example
| Item | Example value |
|---|---|
| Quantities | 10,20 |
| Prices per unit | 5,8 |
| Weighted average cost | 7 USD |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
Match each quantity with its price and use the same unit. A simple average of quoted prices ignores purchase size.
Related calculations
Method and further reading
The example follows the FinMathly calculator method. For broader background, see Investor.gov: Introduction to investing. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
Featured photograph: Pexels.