Weighted Average Calculator

A weighted average is appropriate whenever observations have different levels of importance or represent different-sized groups. Here is when it matters.

When weighted average ≠ simple average

Exam grades: a final exam worth 40% of your grade should not count the same as a quiz worth 5%. Weighted average: (Quiz × 5% + Final × 40% + ...) / total weight.

Portfolio returns: if 80% of your portfolio is in fund A (returned 12%) and 20% in fund B (returned 5%), your portfolio return is 0.8×12% + 0.2×5% = 10.6%, not (12% + 5%) / 2 = 8.5%.

Customer satisfaction scores: if enterprise customers (30% of revenue) rate you 8/10 and SMB customers (70% of revenue) rate you 6/10, the revenue-weighted NPS is 0.3×8 + 0.7×6 = 6.6, not (8+6)/2 = 7.

Average selling price across segments: a product sold at $200 to 100 customers and $800 to 10 customers has an average ASP of (100×$200 + 10×$800) / 110 = $254, not ($200 + $800) / 2 = $500.

When simple average is fine

Use a simple average when every observation carries equal importance and represents an equivalent "unit" — e.g. the average of 5 A/B test conversion rates where each test ran on the same sample size.

Use the weighted average calculator to compute weighted averages with automatic contribution percentages.

The weighted average cost (WAC) method is one of three accepted inventory valuation methods under both GAAP and IFRS. Here is how it works in practice.

The weighted average cost formula

WAC per unit = Total cost of inventory ÷ Total units available

Applied perpetually (after each purchase) or periodically (at end of period).

Example

Beginning inventory: 100 units at $10 = $1,000 Purchase 1: 200 units at $12 = $2,400 Purchase 2: 150 units at $15 = $2,250

Total: 450 units, $5,650 total cost WAC = $5,650 ÷ 450 = $12.56 per unit

If you sell 200 units: COGS = 200 × $12.56 = $2,511 Ending inventory: 250 × $12.56 = $3,139

WAC vs FIFO vs LIFO

Note: LIFO is not permitted under IFRS. US companies can use it for tax deferral.

When to use WAC

WAC is preferred when: inventory is homogeneous (all units are interchangeable), purchase prices fluctuate, and you want to smooth COGS rather than show peaks/troughs.

Use the weighted average calculator to compute weighted averages for any set of values and weights.