Average deal size

This single number shapes the whole sales approach. It decides how many deals a revenue target needs, how much can be spent winning one customer, and how much human time a deal justifies. A target of 300,000 euros at an average of 10,000 euros needs 30 deals. At a win rate of one in four, that means about 120 qualified opportunities. At an average of 30,000 euros, the same target needs only 10 deals.

Small deals suit a fast, low-touch or self-serve process, because a long personal sales cycle would cost more than the deal earns. Larger deals justify discovery calls, proposals and a longer cycle.

• Calculate it every month or quarter, not once, and watch the trend.
• Read it with win rate and sales cycle length. Raising deal size often lengthens the cycle and lowers the win rate.
• Check the median as well. One very large deal can pull the mean far above what a typical deal looks like.
• Compare it with customer acquisition cost to see what a deal is worth spending on.

Divide the revenue from deals won in a period by the number of deals won. Ten deals worth 150,000 euros in total give an average deal size of 15,000 euros. Use the same period for both numbers and count closed-won deals only.

Be clear about what is being averaged. Some teams use first-year value, some the full contract value, and some annualised value. The last is annual contract value, a related but separate measure. Pick one, write it down, and keep to it.

• Mixing definitions, such as first-year value in one report and total contract value in another.
• Including lost, open or free-pilot deals in the average.
• Reporting the mean only, so one very large deal hides what a typical deal is worth.
• Raising the price target without checking the effect on win rate and cycle length.
• Averaging across segments with very different deals, which describes no real customer.
• Comparing months with only two or three deals in them, where one deal moves the figure sharply.