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ASP: Average Sales Price
ASP: Average Sales Price
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Written by Baremetrics
Updated over a week ago

What is Average Sales Price?

Average Sales Price (ASP) refers to the average amount a customer pays when initially subscribing to a service or product. ASP is sometimes known as the average revenue per new account, which is part of the broader metric, average revenue per user (ARPU). ASP focuses solely on revenue from new sales, excluding renewals or upgrades.

Think of ASP as the thermometer of your sales pool – it shows you how hot (or not) your sales are.

How is Average Sales Price calculated?

To calculate ASP, divide the total MRR generated from new customers by the number of new customers. For example, if a SaaS company earns $1,000 from 10 new customers, the ASP is $100 ($1,000 divided by 10).

ASP is presented as a 30-day rolling number. This means it is updated daily to reflect the average sales price based on the past 30 days of data, providing a constantly updated view of your sales performance.

What causes Average Sales Price to change?

Changes in ASP can be caused by several factors, including:

  • Pricing Strategy Adjustments: Changes in the pricing of products or services.

  • Customer Base Shifts: Different customer segments may have different purchasing power or preferences.

  • Market Competition: Competitive pricing can lead to adjustments in your own pricing.

  • Product Mix Changes: Introducing new products or services with different price points can alter the overall ASP.

  • Seasonal Trends: Certain times of the year might see higher or lower spending, affecting the ASP.

  • Economic Factors: Broader economic changes can influence customer spending habits and, in turn, affect the ASP.

Why is it important to monitor ASP?

Monitoring ASP is crucial for several reasons:

  • Inform Pricing Strategies: Monitor ASP trends to inform your pricing decisions. If ASP is increasing, it might indicate market acceptance of higher prices. Conversely, a declining ASP could signal the need to reevaluate your pricing strategy.

  • Financial Health Indicator: ASP can signal the financial health and profitability of your business. A solid ASP often means your business heart is beating strong.

  • Decision Making: ASP data can inform decisions about marketing, sales, and product development.

    • Use insights from ASP to refine your product development. Products attracting higher ASP could be prioritized for further development or feature enhancements.

    • ASP data can guide targeted marketing efforts. Regions or plans with higher ASPs might benefit from increased marketing focus.

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