Avg. Unit price
Why it matters
Three things move it, and a single average hides which one. A change in list price moves it. Discounting moves it. A shift in the mix between cheap and expensive options moves it even when no price has changed.
Take 60 customers on a 100 euro basic package and 40 on a 300 euro pro package. Revenue is 18,000 euros and the average is 180 euros. Next quarter 80 choose basic and 20 choose pro. Nothing changed on the price page, yet revenue is 14,000 euros and the average has fallen to 140 euros, a drop of more than 22 per cent. A lower average with more units can still be fine, but only if the volume gain covers the loss. Raising the average unit price can move revenue as much as winning more customers.
How to apply it
- Divide revenue by units for the same period, and track the trend monthly, since one large or small deal can distort a single period.
- Break it down by package or tier, so a shift in mix is visible.
- Check it after every pricing change, alongside conversion volume.
- Compare it with contribution margin per unit. A higher average is not a gain if the cost of serving each customer rose faster.
What it is
Divide revenue by the units sold in the same period. A unit can be a product, a licence, a seat, a project or a customer, so choose one and keep it. 18,000 euros from 100 units gives an average unit price of 180 euros.
It differs from the list price. The list price is what the price page says. The average unit price is what customers actually paid after discounts and after choosing between cheaper and dearer options.
Common mistakes
- Changing what counts as a unit between periods, such as seats one quarter and customers the next.
- Calling a drop in the average a pricing problem when it was a shift in mix towards the cheaper option.
- Using list price instead of the price customers actually paid after discounts.
- Reading one period without a trend, so a single large deal looks like a pricing change.
- Raising the average without checking whether volume fell by more than the price gained.
- Treating it as the same thing as revenue per customer when a customer buys several units.
