How to use the Average Cost Calculator (Stock Average Down)
- Enter the number of shares and the price paid for each purchase. Leave the third purchase at 0 if you only bought twice.
- Enter the current price per share.
- Read your average cost per share and total invested.
- Check the profit or loss and the return at the current price.
Formula used
Average cost = total amount paid ÷ total shares = (n₁p₁ + n₂p₂ + n₃p₃) ÷ (n₁ + n₂ + n₃). Profit or loss = current price × shares − total invested.
Worked example
Here is the Average Cost Calculator (Stock Average Down) worked through with the example values shown above, so you can check each step by hand.
| Inputs | |
|---|---|
| Purchase 1: shares | 100 |
| Purchase 1: price per share | $50 |
| Purchase 2: shares | 50 |
| Purchase 2: price per share | $40 |
| Purchase 3: shares (optional) | 0 |
| Purchase 3: price per share | $0 |
| Current price per share | $45 |
| Result | |
| Average cost per share | $46.67 |
| Total shares | 150 |
| Total invested | $7,000.00 |
| Current value | $6,750.00 |
| Profit or loss | −$250.00 |
| Return | -3.57% |
How the average is worked out
The average cost is the total amount paid divided by the total number of shares, not the simple average of the prices. If you bought 100 shares at $50 and 50 at $40, you paid $7,000 for 150 shares, so your average cost is $46.67, not $45.
The larger purchase counts for more, which is why the weighted result sits closer to the price of the bigger lot.
Profit or loss at the current price
At a current price of $45 the holding is worth $6,750, a loss of $250 or 3.57% on the $7,000 invested. The price needs to rise to your average cost of $46.67 for you to break even, ignoring fees.
If the price rises to $60, the value is $9,000 and the gain is $2,000, or 28.57%.
Averaging down and adding lots
Buying more after a price drop lowers your average cost, which is called averaging down. Adding a third lot of 50 shares at $35 brings the average to $43.75 across 200 shares. It lowers your break-even price, but it also puts more money into the same investment.
Averaging down works only if the investment recovers. A falling price can reflect a real problem with the company, so adding more is a risk decision, not a guaranteed fix.
Fees, tax and other details
This calculator ignores brokerage fees, taxes and dividends. To include a fee, add it to the purchase cost by raising the price per share slightly, or use a price that already includes charges.
For tax, many places treat each purchase as a separate lot, and some use rules like first-in, first-out, while others allow or require an average cost method. Check your own tax rules, and see the rest of the money calculators here for regular investing.
Frequently asked questions
How do I calculate average cost per share?
Add up everything you paid and divide by the total number of shares.
Is it the same as the average of the prices?
No. It weights each price by the number of shares bought at it.
What does averaging down mean?
Buying more of an investment as its price falls, which lowers the average cost per share.
Are fees included?
No. Add fees to your purchase prices if you want a break-even that includes them.
Can I use it for mutual funds or crypto?
Yes. Any asset bought in several lots works. Enter units in place of shares.
How do I handle more than three purchases?
Combine some purchases first: add the shares, add the amounts paid, and enter the combined lot with its average price.
This calculator gives estimates for information only. Actual figures from a bank, employer, tax authority or doctor may differ. It is not financial, tax, legal or medical advice.