Average Transaction Value and Number of Transactions
31 December 2018
Average Transaction value
The average transaction value is calculated by dividing the total value of all transactions by the number of transactions or sales. This can be calculated on a daily, monthly or annual basis.
An example of this may be - sales of $200,000 for the year, generated from 10 sales or transactions. Therefore the equation would be 200,000 / 10 = $20,000. The average transaction value is $20,000.
3 Common Mistakes
- Not considering the costs involved in the transactions or process.
- Utilising a certain cut-off period (IE sales transactions may fall over into the following period and therefore certain costs may be missed).
- Upselling products or services to increase the average transaction value.
Average Number of Transactions
The average number of transactions is calculated by using the number of transactions over a specified period of time and dividing that by the time period of the desired outcome.
An example of this may be – total number of transactions for the year would be 1095 and the desired outcome is how many transactions on average would there be daily? Therefore the equation is 1095/365(days in a year) = 3 transactions per day.
3 Common Mistakes
- Coupling transactions together as a single sale.
- Expanding a single transaction to multiple transactions.
- Using data from a specific time period, taking into account seasonal expectations if need be.
Episode 25
Do you want fries with that? Increasing your businesses 'Average Transaction Value' can dramatically improve your profit without the cost of attracting new customers.
Jodie Thompson from our Sunshine Coast office talks to host Gavin Nash about this very topic and gives some great examples and tips on how to do it.
Available on Apple Podcasts & Spotify or right here!
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