How to Calculate Weighted Average — Stocks, Grades, Payroll & More

A weighted average is an average where some values matter more than others. It's used across finance, education, and business to make accurate calculations when data points have different importance levels.

What is a Weighted Average?

Unlike a simple average (which gives equal weight to all numbers), a weighted average lets each value have a different importance level. The formula is:

Weighted Average = (Sum of Value × Weight) ÷ Sum of Weights

Quick Example: Stock Purchase Cost

You bought 100 shares at ₹100 and then 50 shares at ₹120.

• Value 1 = ₹100, Weight 1 = 100 shares
• Value 2 = ₹120, Weight 2 = 50 shares
• Weighted Average = (100×100 + 120×50) ÷ (100+50) = ₹106.67 per share

Your simple average would be (100 + 120) ÷ 2 = ₹110, but the weighted average (₹106.67) is more accurate because you own more shares at the lower price.

How to Calculate Weighted Average for Stocks

1. Go to textwonder.com/calc/weighted-average-calculator
2. Click the "📈 Stocks (Avg Cost)" preset to load an example.
3. Replace the example values with your own:
   • Value = Purchase price per share
   • Weight = Number of shares purchased at that price
4. Click + Add Row for each separate purchase.
5. The Weighted Average shows your average cost per share instantly.

Real-World Example

• January: Bought 50 shares at ₹200
• March: Bought 100 shares at ₹180
• June: Bought 50 shares at ₹220

Weighted Average = (200×50 + 180×100 + 220×50) ÷ (50+100+50) = ₹193.33 per share

How to Calculate Weighted Average for Grades (GPA)

1. Go to the weighted average calculator
2. Click the "📚 Grades (GPA)" preset.
3. Update each row with:
   • Value = Your score/grade (as a percentage or GPA point)
   • Weight = Credit hours or course weight
4. The result is your weighted GPA.

Example: Calculating Weighted GPA

• Calculus: Score 85, Credit Hours 3
• English: Score 92, Credit Hours 2
• Physics: Score 78, Credit Hours 4

Weighted GPA = (85×3 + 92×2 + 78×4) ÷ (3+2+4) = 82.78

How to Calculate Weighted Average for Payroll

HR teams use weighted averages to find the average salary across departments with different team sizes:

1. Open the calculator and click "💼 Payroll" preset.
2. For each entry:
   • Value = Average salary in that department
   • Weight = Number of employees in that department
3. The result is the organization's weighted average salary.

Example: Company-Wide Average Salary

• Engineering: ₹75,000/month (20 employees)
• Sales: ₹50,000/month (15 employees)
• Support: ₹35,000/month (10 employees)

Weighted Average = (75000×20 + 50000×15 + 35000×10) ÷ (20+15+10) = ₹56,964 per month

How to Calculate Weighted Average for Inventory Cost

Retail and manufacturing businesses use weighted average cost to value inventory:

1. Click the "📦 Inventory Cost" preset.
2. For each batch purchased:
   • Value = Cost per unit
   • Weight = Number of units in that batch
3. Your weighted average cost per unit appears instantly.

Example: Wholesale Inventory

• Batch 1: ₹100 per unit × 50 units
• Batch 2: ₹110 per unit × 30 units
• Batch 3: ₹95 per unit × 20 units

Weighted Average Cost = (100×50 + 110×30 + 95×20) ÷ (50+30+20) = ₹103.75 per unit

Weighted Average for Financial Returns

Investors use weighted averages to calculate portfolio performance or investment returns:

• Value = Return percentage or yield
• Weight = Amount invested or number of shares

This shows your true average return based on actual capital deployed, not equal-weighted average returns.

When to Use Weighted Average

• Stock purchases: Find your true average cost per share across multiple buys at different prices.
• Academic performance: Calculate GPA when courses have different credit hours.
• Payroll analytics: Determine company-wide average salary across departments with different sizes.
• Inventory valuation: Calculate weighted average cost method (WACOM) for accurate inventory costs.
• Portfolio performance: Calculate true average returns based on capital deployed.
• Quality control: Measure average quality when batches have different quantities.

Weighted Average vs Simple Average

Key Takeaways

• Weighted average accounts for data points with different importance levels.
• Use it for stock cost averaging, GPA calculations, payroll analysis, and inventory valuation.
• Formula: (Sum of Value × Weight) ÷ Sum of Weights.
• When weights are equal, weighted average equals simple average.
• Our free calculator handles any number of values and weights instantly.