Users of educational indicators frequently compare outcomes of students from demographically similar schools, districts, or states. The typical practice of presenting relevant background information along with student performance data unfortunately leaves a significant amount of additional analysis up to the reader. In considering approaches to developing indicators that facilitate comparisons among areas that have students with similar background characteristics, this article addresses concerns about such indicators and then presents a framework for deciding what characteristics to include and what methodology to use. Examples of efforts to present such indicators for schools and districts are used as illustrations. An analysis is presented showing indicators of state graduation rates relative to the average state rate and to the rate for similar states. The results demonstrate that the choice of demographic characteristics is more important than the choice of methodology, but that multiple criteria must be considered when developing such indicators.