What Is Average Deal Size?
Key Takeaways
- Average deal size is the mean value of closed won deals over a given period.
- It is a key input into revenue forecasting alongside win rate and deal volume.
- Segment by deal type or customer size to surface actionable insights.
- Strategies to increase average deal size include upselling, bundling, and targeting larger customers.
What average deal size measures
Average deal size is calculated by dividing total revenue from closed won deals by the number of deals closed in a given period. It tells you the typical commercial value of a new customer relationship or contract. For subscription businesses, deal size is often expressed as annual contract value (ACV); for transactional businesses, it may be expressed as average order value. Average deal size is one of three core pipeline metrics — alongside deal volume and win rate — that together determine revenue output. Understanding where your average sits, and how it is trending, is fundamental to reliable revenue forecasting.
Why segmentation matters
A single blended average deal size can obscure important patterns. A business serving both SME and enterprise clients may have deals ranging from £2,000 to £200,000; the average of £30,000 tells you very little about either segment. Segmenting deal size by customer type, industry, deal source, or product line reveals which segments generate the most revenue per deal and where the greatest growth leverage exists. For capacity planning, knowing that enterprise deals take twice as long to close but are five times larger helps you make better decisions about where to focus your sales team's time.
Strategies to increase average deal size
Increasing average deal size without reducing win rate is one of the most direct routes to revenue growth. Common approaches include: expanding the scope of initial proposals to include more products or services; introducing tiered pricing with premium options; bundling complementary services that address adjacent problems; and deliberately targeting larger buyer organisations where budget authority exists for bigger commitments. Each tactic carries risk — larger proposals can lengthen sales cycles and reduce win rates — so test changes systematically and track the impact on both deal size and conversion before scaling.
Average deal size in revenue forecasting
In a simple revenue model, projected revenue equals: number of new deals closed multiplied by average deal size. This means average deal size directly scales your forecast. An SME forecasting 40 closed deals at an average of £15,000 projects £600,000; if average deal size rises to £18,000 through targeted upselling, revenue rises to £720,000 with no change in deal volume or win rate. Building a forecast that tracks deal size separately — rather than applying a single revenue-per-deal assumption — makes the model more transparent and easier to sense-check against pipeline data.