Unit Price - Construction

Construction

Average price per unit

As with other marketing averages, average price per unit can be calculated either from company totals or from the prices and shares of individual SKUs."

Average Price per Unit ($) = Revenue ($) / Units Sold

or

Average Price per Unit ($) = + + . . .

The average price per unit depends on both unit prices and unit sales of individual SKUs. The average price per unit can be driven upward by a rise in unit prices, or by an increase in the unit shares of higher-priced SKUs, or by a combination of the two. An 'average' price metric that is not sensitive to changes in SKU shares is the price per statistical unit.

Price per statistical unit

Price per Statistical Unit ($) = Total Price of a Bundle of SKUs Comprising a Statistical Unit ($)

Procter & Gamble and other companies face a challenge in monitoring prices for a wide variety of product sizes, package types, and product formulations. There are as many as 25 to 30 different SKUs for some brands, and each SKU has its own price. In these situations, how do marketers determine a brand’s overall price level in order to compare it to competitive offerings or to track whether prices are rising or falling? One solution is the 'statistical unit,' also known as the 'statistical case' or – in volumetric or weight measures – the statistical liter or statistical ton. A statistical case of 288 ounces of liquid detergent, for example, might be defined as comprising:

Four 4-oz bottles = 16 oz

Twelve 12-oz bottles = 144 oz

Two 32-oz bottles = 64 oz

One 64-oz bottle = 64 oz

Note that the contents of this statistical case were carefully chosen so that it contains the same number of ounces as a standard case of 24 12-ounce bottles. In this way, the statistical case is comparable in size to a standard case. The advantage of a statistical case is that its contents can approximate the mix of SKUs the company actually sells.

Whereas a statistical case of liquid detergent will be filled with whole bottles, in other instances a statistical unit might contain fractions of certain packaging sizes in order for its total contents to match a required volumetric or weight total.

Statistical units are composed of fixed proportions of different SKUs. These fixed proportions ensure that changes in the prices of the statistical unit reflect only changes in the prices of the SKUs that comprise it.

The price of a statistical unit can be expressed either as a total price for the bundle of SKUs comprising it, or in terms of that total price divided by the total volume of its contents. The former might be called the 'price per statistical unit'; the latter, the 'unit price per statistical unit.'