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What a weighted average actually does

A regular average treats every value equally. A weighted average lets some values matter more than others. The formula: weighted average = Σ(value × weight) ÷ Σ(weight). Multiply each value by its weight, add the products, divide by the sum of the weights. That is the whole calculation — there is nothing else to it.

Excel has a function for this — SUMPRODUCT(values, weights) / SUM(weights) — but you need Excel. This page does the same thing in a browser tab, with no install and no subscription.

Worked example — class grade

When weighted averages are the right tool

• Grades — homework, midterm, final each carry a different percentage of the course.
• Portfolio returns — each holding contributes a return weighted by the dollars invested in it.
• Survey results — responses weighted by sample size, region, or demographic.
• Inventory cost — weighted average cost of goods sold (WAC) when units were purchased at different prices.
• Quality scores — composite scores where some metrics matter more than others.

Weighted vs. plain average

If every weight is the same, the weighted average equals the plain average. So a plain mean is just a weighted average with all weights set to 1. The difference matters the moment one input deserves to count more than another — and most of the time, in real numbers, one does.