Average deal size
In short
Average deal size is the average value of the deals your team closes in a given period. You calculate it by dividing the total value of closed-won deals by the number of closed-won deals.
It is one of the inputs to pipeline math: with a known win rate and average deal size, you can estimate how much pipeline you need to hit a revenue target. It is a planning number, not a promise about any single deal.
How to calculate it
Say a team closes 20 deals in a quarter worth 500,000 in total. The average deal size is 500,000 divided by 20, which is 25,000.
Decide upfront which value you use, such as first-year contract value or annual contract value, and apply it consistently. Mixing one-time fees, multi-year totals, and recurring revenue makes the average meaningless.
Why it matters
- Pipeline planning: Target revenue divided by average deal size gives the number of deals needed, which you can turn into required pipeline using win rate.
- Quota and capacity: It helps set realistic quotas and headcount for a segment.
- Go-to-market fit: It shows whether your motion suits the price point, for example whether heavy outbound effort pays back on small deals.
Limits of the average
A few large deals can pull the mean far above what a typical deal looks like. If your deals range widely, also check the median and break the number out by segment, region, or product.
Segment it
Enterprise and small business deals behave differently. A blended average of the two describes neither well.
Track the trend
A rising average can mean better targeting or just more discounting delays. Read it next to win rate and sales cycle length.
How teams increase it
- Target larger accounts: Tighten your ideal customer profile toward companies with bigger budgets and more seats.
- Multi-thread: Involve more stakeholders so scope expands beyond one team.
- Package and expand: Offer tiers or add-ons that reflect the value delivered, and plan expansion early.
- Watch discounts: Set approval rules so discounting does not quietly erode the number.
Average deal size FAQs
How do you calculate average deal size?
Divide the total value of closed-won deals in a period by the number of closed-won deals. For example, 20 deals worth 500,000 combined give an average deal size of 25,000. Use one consistent value definition, such as annual contract value.
What is a good average deal size?
It depends on your market, price point, and sales motion, so there is no universal good number. Compare yours against your own history and segments, and check that it covers the cost of the effort needed to win those deals.
What is the difference between average deal size and average contract value?
Average deal size is the mean value of closed deals as you define it, which can include setup fees or multi-year totals. Average contract value usually normalizes to annual recurring value. The two match only if you define them the same way.
How can you increase average deal size?
Focus on larger or better-fit accounts, involve more stakeholders in each deal, offer packages and add-ons that match the value delivered, and control discounting. Track the change by segment so you know which action moved the number.
