diff --git a/hledger-lib/Hledger/Data/Transaction.hs b/hledger-lib/Hledger/Data/Transaction.hs
index 8203a34a9..8980e34a9 100644
--- a/hledger-lib/Hledger/Data/Transaction.hs
+++ b/hledger-lib/Hledger/Data/Transaction.hs
@@ -260,6 +260,7 @@ isTransactionBalanced styles t =
       bvsum' = canonicalise $ costOfMixedAmount bvsum
       canonicalise = maybe id canonicaliseMixedAmount styles
 
+-- XXX refactor
 -- | Ensure this transaction is balanced, possibly inferring a missing
 -- amount or conversion price, or return an error message.
 --
@@ -298,30 +299,45 @@ balanceTransaction styles t@Transaction{tpostings=ps}
       ramountsinorder = concatMap amounts rmixedamountsinorder
       rcommoditiesinorder  = map acommodity ramountsinorder
       rsumamounts  = amounts $ sum rmixedamountsinorder
-      -- assumption: the sum of mixed amounts is normalised (one simple amount per commodity)
-      t'' = if length rsumamounts == 2 && all ((==NoPrice).aprice) rsumamounts && t'==t
+      -- as it says above, we can infer a conversion price when
+      t'' = if t'==t  --  all real amounts were explicit (we didn't have to infer any)
+               && length rsumamounts == 2  -- and the sum of real amounts has exactly two commodities (assumption: summing mixed amounts normalises to one simple amount per commodity)
+               && all ((==NoPrice).aprice) rsumamounts  -- and none of the amounts had explicit prices
              then t'{tpostings=map inferprice ps}
              else t'
           where
-            -- assumption: a posting's mixed amount contains one simple amount
-            inferprice p@Posting{pamount=Mixed [a@Amount{acommodity=c,aprice=NoPrice}], ptype=RegularPosting}
+            inferprice p@Posting{pamount=Mixed [a@Amount{acommodity=c,aprice=NoPrice}], ptype=RegularPosting} -- assumption: a posting's mixed amount contains one simple amount
                 = p{pamount=Mixed [a{aprice=conversionprice c}]}
                 where
                   conversionprice c | c == unpricedcommodity
-                                        -- assign a balancing price. Use @@ for more exact output when possible.
-                                        -- invariant: prices should always be positive. Enforced with "abs"
+
+                                        -- calculate a price that makes the postings balance, and give it "just enough"
+                                        -- display precision that a manual calculation with the displayed numbers
+                                        -- shows the transaction balancing.
                                         = if length ramountsinunpricedcommodity == 1
+
+                                           -- when there is only one posting in the target commodity,
+                                           -- show a total price (@@) for more exact output. In this
+                                           -- case show all available decimal digits, it shouldn't be too many.
                                            then TotalPrice $ abs targetcommodityamount `withPrecision` maxprecision
-                                           else UnitPrice $ abs (targetcommodityamount `divideAmount` (aquantity unpricedamount)) `withPrecision` maxprecision
+
+                                           -- otherwise, calculate the average unit conversion price across all postings.
+                                           -- Set the precision to the sum of the precisions of the commodities involved,
+                                           -- which should be enough to make calculation look right while also preventing
+                                           -- irrational numbers from printing excessive digits.
+                                           else UnitPrice $ abs unitprice `withPrecision` sumofprecisions
+
                                     | otherwise = NoPrice
                       where
                         unpricedcommodity     = head $ filter (`elem` (map acommodity rsumamounts)) rcommoditiesinorder
                         unpricedamount        = head $ filter ((==unpricedcommodity).acommodity) rsumamounts
                         targetcommodityamount = head $ filter ((/=unpricedcommodity).acommodity) rsumamounts
                         ramountsinunpricedcommodity = filter ((==unpricedcommodity).acommodity) ramountsinorder
+                        unitprice             = targetcommodityamount `divideAmount` (aquantity unpricedamount)
+                        sumofprecisions       = (asprecision $ astyle $ targetcommodityamount) + (asprecision $ astyle $ unpricedamount)
             inferprice p = p
 
-      -- maybe infer prices for balanced virtual postings. Just duplicates the above for now.
+      -- maybe infer prices for balanced virtual postings. Duplicates the above. XXX
       bvmixedamountsinorder = map pamount $ balancedVirtualPostings t''
       bvamountsinorder = concatMap amounts bvmixedamountsinorder
       bvcommoditiesinorder  = map acommodity bvamountsinorder
@@ -336,13 +352,15 @@ balanceTransaction styles t@Transaction{tpostings=ps}
                   conversionprice c | c == unpricedcommodity
                                         = if length bvamountsinunpricedcommodity == 1
                                            then TotalPrice $ abs targetcommodityamount `withPrecision` maxprecision
-                                           else UnitPrice $ abs (targetcommodityamount `divideAmount` (aquantity unpricedamount)) `withPrecision` maxprecision
+                                           else UnitPrice  $ abs unitprice             `withPrecision` sumofprecisions
                                     | otherwise = NoPrice
                       where
                         unpricedcommodity     = head $ filter (`elem` (map acommodity bvsumamounts)) bvcommoditiesinorder
                         unpricedamount        = head $ filter ((==unpricedcommodity).acommodity) bvsumamounts
                         targetcommodityamount = head $ filter ((/=unpricedcommodity).acommodity) bvsumamounts
                         bvamountsinunpricedcommodity = filter ((==unpricedcommodity).acommodity) bvamountsinorder
+                        unitprice             = targetcommodityamount `divideAmount` (aquantity unpricedamount)
+                        sumofprecisions       = (asprecision $ astyle $ targetcommodityamount) + (asprecision $ astyle $ unpricedamount)
             inferprice p = p
 
       -- tie the knot so eg relatedPostings works right
diff --git a/tests/misc/precision.test b/tests/misc/precision.test
index 583290dcd..2cca53902 100644
--- a/tests/misc/precision.test
+++ b/tests/misc/precision.test
@@ -78,6 +78,7 @@ hledgerdev -f - balance --cost
 --------------------
                    0
 >>>=0
+
 # hledger 0.14pre: precision=2, presumably from price
 #            $3266.32  assets:investment:ACME
 #           $-3266.32  equity:opening balances
@@ -93,8 +94,8 @@ hledgerdev -f - balance --cost
 #              $-3266  equity:opening balances
 #--------------------
 #                   0
-## 6. with a default commodity.. XXX should observe it
 
+## 6. with a default commodity.. XXX should observe it
 hledgerdev -f - balance --cost
 <<<
 D $1000.0
@@ -122,3 +123,40 @@ D $1000.0
 ###            $-3266.3  equity:opening balances
 ###--------------------
 ###                   0
+
+# 
+# 7. when there are multiple postings in the commodity being priced,
+# show the averaged unit price, with precision equal to the sum of
+# the max precisions of the commodities being converted (#262).
+# Here the (irrational) price should be displayed with just precision 4
+# (C's precision 2 + D's precision 2).
+hledgerdev -f- print
+<<<
+1/1
+    c    C 10.00
+    c    C 11.00
+    d  D -320.00
+>>>
+2015/01/01
+    c  C 10.00 @ D 15.2381
+    c  C 11.00 @ D 15.2381
+    d     D -320.00
+
+>>>=0
+
+
+## 8. Here the price should be displayed with precision 7
+# (E's precision 4 + F's precision 3).
+hledgerdev -f- print
+<<<
+1/1
+    e    E 10.0000
+    e    E 11
+    f  F -320.000
+>>>
+2015/01/01
+    e  E 10.0000 @ F 15.2380952
+    e  E 11.0000 @ F 15.2380952
+    f    F -320.000
+
+>>>=0