Price realisation is the average selling price per unit of the product / commodity for the business. It is useful in computing sales realisation over different periods and different geographies for the same business and different businesses in the same sector.
Price Realisation is calculated as –
Price Realisation = Sales Value (in amount) / Quantity sold (in units)
Say for a quarter, Company A reported sales of Rs. 2,555.90 crore and cement sales of 5.4 million tonnes i.e. 54 lakh tonnes.
Calculating price realisation as Rs. 2,55,590 lakh / 54 lakh tonnes
Price per tonne = Rs. 4,733 per tonne
Hence, price per Rs 50 kg bag = Rs. 237 per bag
Thus, price realisation for Comapny A for quarter is Rs. 237 per 50 kg cement bag.
Similarly, price realisation can be computed for other cement manufacturers, of other telecom companies, chemical and metal companies etc.