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Trading and Investment Terms

Average Selling Price (ASP)

The term Average Selling Price or ASP is the price, which a particular quality of goods or services are generally sold at. The average selling price is influenced by the kind of product and its life cycle.

 

The average selling price is usually used in the retail and technology sector. The settled ASP for a specific commodity can behave as a benchmark price, assisting other manufacturers, producers, or retailers in determining the prices for their own goods and services.

 

Marketers who attempt to decide a price for an item should likewise consider where they need their item to be situated. If they would like their product’s image to be part of a high quality premium choice, they might need to set a higher ASP.

 

Items like PCs, cameras, TVs, and gems will in general have higher average selling prices while items like textbooks and audio and music discs will have a low average selling price. At the point when an item is the last piece of its item life cycle, the market is no doubt immersed with competition, in this manner, driving down the ASP.

 

In order to calculate the Average Selling Price, we have to divide the total revenue earned from the sale of the items by the total number of items sold. This average selling price is usually announced along with quarterly financial results and can be considered as precise as the possible given the guidelines of fraudulent reporting.

 

The term average selling price has a spot in the housing market. When the average selling price of a home within a specific area experiences a rise, this may be considered as an indication of a market that is booming . Conversely, when the average price drops, so does the view of the market in that specific region.

 

A few sectors use ASP in a somewhat different manner. The hospitality industry especially hotels generally refer to it as the average room or average day rate. These average rates will in general be higher during traveling seasons, while rates typically drop when travel is by all accounts low or during slow times of year.

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