How to Calculate An Average ValueLast Updated: July 30, 2019
A lot of companies use averages in commission calculations. For example, it is common to see companies commission reps on the average Annual Contract Value of a contract rather than just the first month's value or the total value.
Calculating an Average Recipe Steps
Let's tackle this in three steps:
- Find or calculate the total value you want to average
- Find or calculate the total duration over which you want to average the total value
- Divide the total value by the duration
1. Find Or Calculate the Total Value
The first step in finding an average value is to find or calculate a total value. Let's assume you want to find Average Contract Value. The first step is to find a Total Contract Value. This is typically a field on the CRM.
To do this, we can create a Variable called TotalContractValue in Spiff and put the following into the Variable's formula:
2. Find or Calculate the Total Duration
This step can be a bit more complicated. But typically you are trying to find the length of a deal's contract. Sometimes you will be lucky and the CRM will already include a calculated field for the total contract duration of the deal's contract. In this case, you would simply create a variable called something like TotalContractDuration with the following as the formula:
In other cases, you may need to calculate the contract duration yourself. Spiff provides a number of tools to help you do this. Let's assume we have a Contract Start Date and a Contract End Date and we are trying to find the average monthly value of the contract.
To do this, we will make use of Spiff's handy months_to function. You can define TotalContractDuration in this case as:
This will return the total duration of the contract in months.
3. Divide the Total Value by the Total Duration
The last step is very easy. We will simply create a new variable called AverageContractACV with this formula:
deal.TotalContractValue / deal.TotalContractDuration