Weighted Average in Tableau

What is weighted average: A weighted average is a way to calculate an average where some points contribute more than others.

Average vs Weighted Average – Key Differences

The key differences between this Average are as follows –

The average is the sum of all individual observations divided by the number of observations. In contrast, the weighted average is observation multiplied by the weight and added to find a solution.

An average is a mathematical equation, whereas the weighted average is applied in the daily activities of finance.

The average is the representation of a set of data, whereas the weighted average needs to evaluate to arrive at the solution of a problem.

Average can be solved for the set of data by using the arithmetic formula. The weighted average component is given the weight of value to arrive at a specific answer.

Calculate Weighted average in tableau:

Using Superstore, let’s find the weighted average profit per product and order by category.

To find a weighted average, multiply each number by its weight, add the results then divide by the sum of the weights.

For superstore weighted profit,  we need to multiply our profit by quantity, sum it up then divide by sum of quantity:

That’s it. Now we can visualize it how it differs from average profit.

Why weighted average?

Weighted average differs from finding the normal average of a data set because the total reflects that some pieces of the data hold more “weight,” or more significance, than others or occur more frequently.

Weighted average considers the relative importance of all values and thus is a more accurate representation of the average of a set.

Both simple and weighted average methods are acceptable methods of calculating the average of a set of values. However, it is primarily their utility in various applications that separates them. While simple average is more useful in simple mathematical calculations, weighted average has a wider range in accounting and financial applications. This makes weighted average a more relevant analysis tool for business applications.