An average is the best way to get an insight of the data as a whole.
But sometimes average gives you biased value.
In those [almost every time] situations...
...the best way is to calculate the weighted average.
And I have found the best way is to use a formula by combining SUMPRODUCT and SUM functions.
This method is simple and easy to apply.
So today, in this post, I’d like to share with you how to calculate a weighted average in Excel using SUMPRODUCT and SUM.
Let’s get started.
Difference between Normal and Weighted Average
In the below example, we have 1658 as a normal average and 1445 as a weighted average.
Let me clarify this difference with two points.
Now, follow these two simple steps.
- In the C7 cell, enter following formula.
- Click OK.
Now, you have 1445 as a weighted average of price and product.
As I said, sumproduct is an easy way to calculate the weighted average or weighted mean in Excel.
The best part about sumproduct is it can multiple and sum array in a single cell.
How does this work
We need to break down this formula to understand it.
First of all, sumproduct will calculate the product of price and quantity for the all the products return the sum of all those.
After that, sum function will give you the sum of quantity.
And, in the end, you will get the weighted average by dividing values from both of the function.
Check this out: SUMPRODUCTIF
Calculate Moving Weighted Average
Let’s come one step further. Let’s move in data analysis part.
By using the same formula you can calculate weighted moving average as well. Download this data table from here to follow along.
Here are the steps:
- Enter the below formula in the cell D4 and drag down to the end.