What are unit sales?
unit sales concerns the total amount of goods sold or services sold during a specific reported period, which is divided into the price for each unit sold. The calculation of this amount is important because it allows companies to determine the impact of the price change on the total sale and the general profitability of business. Carefully monitoring the sales of unit units from one period to another, it is possible to identify the unit price, which is most likely to provide the highest amount of sales, and at the same time allows businesses to obtain the largest profit per unit without creating a huge inventory of the finished goods.
The process for calculating the sale of units is very simple. The first number required is the total number of units sold in the considered period. This number is divided into the total amount of sales that occurred in the same time frame. As a result, it is possible to determine the average price of the product that applies to each unit of sale sold.
As an example, a company that sold one million units of a given product in one month of operation also generated $ 10 million in the United States (USD) during the same month. By distributing income by the number of units sold, it can be found that the average price of the product per unit per month was $ 10. This average price can then be compared with the averages of the previous months and determine whether the average income generated by each unit increases, decreases or remains constant.
There are several reasons why unit sales may vary from one period to another. One of the usual reasons is that the company loses a number of customers who have purchased a smaller product at a higher price per unit, and at the same time they have acquired a customer who bought in larger volumes in exchange for reduced unit. The result is a shift in the client base, the average price of the product decreases and subneI am earning less money from each unit sold. However, business can still publish higher actual earnings if more units have been sold than in previous periods.
Whenever there is a certain change in the average price of unit sales product, it is important to determine the reasons for shift. In some cases, the change may be in the best interest of the company in the long run, although the average price was a decline. At the same time, the shift in unit sales could also indicate the early phases of a problem that ultimately affects business in a negative way. Only the analysis of the factors that led to the shift can decide what steps, if at all, should be undertaken to remedy the problems in the coming period and achieve an acceptable scope of the sale of units.