About the Stock Average
Buying shares of the same stock at different prices over time - whether intentionally through dollar-cost averaging or just through multiple purchases - means your true cost basis isn't any single purchase price. Our Stock Average Calculator finds your weighted average cost per share across multiple buys.
How It Works
The calculator multiplies each purchase's share count by its price to find the total cost of each lot, adds those costs together, and divides by the total number of shares across all purchases to find the true weighted average cost per share.
Formula & Methodology
This is a weighted average, not a simple average - each purchase price is weighted by how many shares were bought at that price, so a larger purchase pulls the average toward its price more than a smaller one does. That's a meaningfully different result from just averaging the raw price numbers, which would treat a 10-share purchase and a 1,000-share purchase as equally important to the outcome.
Step-by-Step: Calculating It By Hand
- 1For each purchase lot, multiply the number of shares by the price paid to find that lot's total cost.
- 2Add up the total cost across all purchase lots.
- 3Add up the total number of shares across all purchase lots.
- 4Divide total cost by total shares to find the weighted average cost per share.
Examples
Two purchases
100 shares at $50 plus 50 shares at $40 gives a total cost of $7,000 across 150 shares, for an average cost of about $46.67 per share.
Why it's not a simple average
Simply averaging $50 and $40 would give $45 - but because more shares were bought at $50, the true weighted average ($46.67) is pulled higher toward that price.
Advantages
- Calculates the true weighted average, not a misleading simple average of prices
- Useful for tracking cost basis across dollar-cost-averaging purchases
- Helps determine your real breakeven price before selling
- Works for any number of purchase lots by running the calculation multiple times
Common Mistakes
- Averaging purchase prices directly without weighting by number of shares
- Forgetting to include trading fees or commissions in the true cost of each purchase
- Not tracking cost basis lots separately for tax purposes, which matters for capital gains calculations
- Assuming average cost automatically equals your breakeven price after accounting for any dividends received
Edge Cases to Watch For
- Trading commissions or fees on each purchase should be added to that lot's cost for a fully accurate average, though many modern brokers charge no commission.
- Shares sold (rather than bought) require a separate cost-basis method decision (FIFO, LIFO, or specific-lot identification) that affects tax reporting differently from this simple average.
- Stock splits change the share count and price simultaneously, requiring your historical purchase data to be adjusted before recalculating an accurate average.
- Dividends received in cash don't change your cost basis, but dividends automatically reinvested into new shares effectively add another purchase lot to the average.
Common Use Cases
- Finding your true average cost basis after multiple stock purchases
- Tracking dollar-cost-averaging progress into a position
- Determining a realistic breakeven price before selling
- Tax and record-keeping purposes for investment accounts