Published by MBA Skool Team, Last Updated: September 14, 2019
What is Price Per Statistical Unit?
Price per statistical unit, can be defined as the total price of the bundle of SKUs comprising it or in terms of the total price divided by the total volume of it. Price per statistical unit may also be called per unit statistical price. This is applicable to products which are sold in multiple variants and in different bottles or different sizes.
To have a relative comparison, they must be determined as comparable units. To make them comparable the price per statistical unit is derived. Using a standard rather than using the actual mix of the product and its sizes results in the calculation of price per statistical unit.
Formula of Price Per Statistical Unit
Price per statistical unit (in any currency) = total price of the bundled SKUs comprising a number of statistical units
The formula may also be expressed as,
Price per statistical unit = total price of SKUs or bundle/ total volume
The price hence can be found as a factor of the price and volume of the product. This is a more simplified way of showing how the calculation is done. Subsequently the calculation can be done in a more complicated manner as the number of SKUs keep increasing.
Importance of Price Per Statistical Unit
1. Price per statistical unit is required by marketers who sell the same products is different stock keeping units (SKUs), that is, in different packaging, sizes, forms and configurations. If the change of these prices is not accurately reflected in each of these SKUs the marketer may lost sight of the products life cycle. A problem in pricing may lead to the whole product range failing due to price sensitivity.
2. The packaging of several units of a product into say, a single pack filter or a double pack filter, is very much dependent on the price per statistical unit. Different SKUs of the same product when sold together may have different kind of customer reactions, and this kind of packaging aids the sale. They can be hence sold on a standalone basis too.
3. The price per statistical unit helps in determining the price movements within a market. It tells us how the prices of other products are changing on an average in the market and to what degree can this change reflecting in the market. It also tells us how differently priced SKUs are varying from the individual products. Pricing changes in SKU will lead to the change in price per statistical unit.
4. The Price per statistical unit, is also important in terms of pricing the product. It is very essential to understand how the different SKUs of a product will be priced according to the price of the individual product. This clearly helps deal with the customer point of view and the price sensitivity.
Example of Price Per Statistical Unit
Four 4 oz bottles = 16oz
One 64 oz bottle = 64oz
This is an example of any shampoo of any brand. Let’s take Procter and Gamble for instance. They have the same product is different sizes, bottles, etc. Therefore, now calculation of the price per statistical unit is very essential to have effective pricing.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
Browse the definition and meaning of more similar terms. The Management Dictionary covers over 2000 business concepts from 5 categories.