The formula
Average deal size = revenue from deals won in the period / number of deals won
How to calculate average deal size
Take the deals you won in one period. Add up what they were worth and divide by how many there were.
Worked example, with made-up figures: last quarter you won 14 deals worth $84,000 in all, so your average deal size is $84,000 / 14 = $6,000. Next quarter's target is $96,000, which at $6,000 a deal is 16 deals. At a 25% win rate, 16 deals need 64 opportunities that reach a decision.
Now say one of those 14 deals was a single $30,000 contract. The other 13 were worth $54,000, an average of $4,154. Plan on that and $96,000 needs 24 deals, not 16. If the big one was a one-off, 24 is the honest number.
How to measure it in your team
- Count deals won only. Open and lost deals don't have a final value.
- Use one measure of value and keep it: first-year contract value, total contract value, or the one-off price. Mixing a monthly figure with a yearly one makes the average meaningless.
- Measure new business and renewals separately. A renewal is usually a different size, and blending them hides a drop in either.
- Look at the median beside the average. If they're far apart, a few large deals are carrying the number.
- Split it by source or by rep when you want to know where bigger deals come from.
How to turn it into a deal count
Divide the revenue target by your average deal size to get the deals you need. Divide the deals by your win rate to get the opportunities you need. The win rate calculator works out the rate from your own won and lost deals, and the activity calculator takes the chain back to this week's calls.
What a good average deal size looks like
We don't print an industry figure. Deal size is set by what you sell and who buys it, so the useful comparison is with your own last four quarters. Good is steady or rising without the win rate falling.
| Who's looking | What they check | What good looks like |
|---|---|---|
| Sales manager | Average and median by rep and by source, each month | The two close together, and no rep's deals shrinking quarter after quarter |
| Rep | Their own median against the team's | Proposals that lead with the full option |
| Founder or owner | Deal size against the cost of winning a deal | Each deal worth well above what it cost to win |
Why is your average deal size dropping?
- Discounts are creeping in to get deals over the line.
- Leads are coming from smaller buyers than last quarter.
- Reps are proposing one product when the buyer needed two.
- A rep behind on a deal count target is closing small deals to hit it.
And what raises it:
- Put the fuller option first in every proposal, with the smaller one beside it.
- Price in tiers, so a buyer who needs more has an obvious step up.
- Ask about the next need at every review with an existing customer.
- Set targets in revenue rather than deal count, so a small deal doesn't count the same as a big one.
Work out your average deal size
Average deal: $6,000
- Deals the target needs: 16
Where it shows up in your week
A target in revenue needs a deal count behind it. A goal with a deadline shows what each month still needs, with a mark for where you should be by today.
Related KPIs, terms and tools
Questions managers ask
Sources
The page states no outside figure, so there's nothing to cite here.