How to Calculate Average Selling Price
To calculate the average selling price (ASP) for a product over a given time period, you’ll need two pieces of information:
- Number of Sales – The total number of subscribers that were added during the time period.
- Total MMR Added – The sum of all MRR added from new sales during the time period.
The formula for calculating average selling price (ASP) for a given period is:
Average Selling Price (ASP) = Total MRR AddedNumber of Sales
Example 1: Calculating ASP to Measure B2B Sales Performance
You are the Sales Manager for a B2B SaaS Company. You implement a three-tier pricing strategy for your subscription-based product offering with the following packages:
- Basic Package – $500/month or $5,000/year
- Pro Package – $1,000/month or $10,000/year
- Enterprise Package – $2,000/month or $20,000/year
Annual subscribers pay the full subscription amount up-front, so we’ll need to amortize those amounts when adding them to our MRR. With these parameters in place, we can generate some monthly sales data that includes the total number of sales and total MRR added:
Subscription Option |
Number Sold |
Total MRR Added |
Basic Monthly |
12 |
$6,000 |
Basic Yearly |
2 |
$833 |
Pro Monthly |
9 |
$9,000 |
Pro Yearly |
2 |
$1,667 |
Enterprise Monthly |
3 |
$6,000 |
Enterprise Yearly |
1 |
$1,667 |
|
|
|
Total |
29 |
$25,165 |
Now we’re ready to calculate ASP:
Average Selling Price (ASP) = $25,16529 $868
The calculation tells you that your sales team is adding an average of $868 in MRR for each new subscriber they close.you gain.
Example 2: Using ASP for Competitor Analysis
In markets where transaction data is publicly available, marketers can learn the average selling price for their competitor’s products and use this information to inform their own pricing strategies.
A great example is the real estate industry. Real estate brokers sell a high volume of homes and publicly report sales prices for homes in the areas where they do business. A real estate agent working to sell a home can determine the average selling price for other homes in the same area over the last 3 months, 6 months, or even a year.
In this context, knowing the marketplace ASP helps real estate agents estimate what buyers might be willing to pay for the house and get the best possible deal for their clients.