What is Average Deal Size?
Average deal size is the mean value of all closed-won opportunities over a specific period.
Average Deal Size Formula:
Average Deal Size = Total Value of Closed-Won Deals / Number of Closed-Won Deals
Example:
- Closed 25 deals in Q1
- Total value: $750,000
- Average Deal Size = $750,000 / 25 = $30,000
Why Average Deal Size Matters
Go-to-Market Strategy
Deal size determines your entire sales approach.
Low Deal Size (<$15K):
- High volume required
- Short sales cycles (weeks)
- Inside sales or self-service
- Lower cost per acquisition acceptable
- Fewer deals needed
- Long sales cycles (months)
- Field sales or enterprise teams
- Higher acquisition investment justified
Resource Planning
Deal size drives hiring and capacity decisions.
Example:
- $2M annual quota
- $20K average deal size → Need 100 closes → ~400 opportunities at 25% close rate
- $50K average deal size → Need 40 closes → ~200 opportunities at 20% close rate
Forecasting Accuracy
Understanding deal size distribution improves forecast accuracy.
Scenario:
If your pipeline has deals ranging from $10K to $500K, knowing the average deal size for each stage helps predict revenue more accurately than applying a blanket average.
Average Deal Size Benchmarks
By Company Segment
| Segment | Average Deal Size | Sales Cycle | Close Rate | Quota per AE |
|---|---|---|---|---|
| **SMB** | $5K - $15K | <2 months | 25-35% | $300K-$500K |
| **Mid-Market** | $15K - $50K | 2-4 months | 20-28% | $500K-$1M |
| **Upper Mid-Market** | $50K - $100K | 4-6 months | 15-22% | $750K-$1.5M |
| **Enterprise** | $100K - $500K+ | 6-12 months | 12-18% | $1.5M-$3M |
By Industry (B2B)
| Industry | Typical Deal Size | Notes |
|---|---|---|
| **DevTools** | $10K - $30K | Developer-led, faster cycles |
| **HR Tech** | $20K - $40K | Competitive, mid-market focus |
| **Marketing Automation** | $25K - $60K | Wide range based on sophistication |
| **Sales Tech** | $30K - $75K | Higher for enterprise platforms |
| **CX/Support** | $15K - $50K | Volume-driven, lower ASP |
Median B2B SaaS Deal Size
Overall median: ~$26,000
This means half of all B2B SaaS deals are below $26K and half are above. Use median alongside average to understand distribution.
Deal Size Distribution
Why Median Matters
Average deal size can be misleading due to outliers.
Example:
- 10 deals @ $20K = $200K
- 1 deal @ $500K = $500K
- Total: 11 deals = $700K
- Average: $63,636 (skewed by one large deal)
- Median: $20,000 (more representative)
Healthy Deal Distribution
Ideal Mix:
- 60% of deals at core ASP (your target)
- 30% slightly below/above ASP
- 10% significantly larger (whale accounts)
Dependence on one or two massive deals. If they slip, revenue crashes.
Increasing Average Deal Size
Target Larger Companies
Strategy:
Shift ICP toward companies with more revenue and budget.
Example:
- Current: 10-50 employee companies (deal size: $15K)
- Target: 50-200 employee companies (deal size: $35K)
Multi-Threading Expansion
Strategy:
Sell department-wide instead of single-user licenses.
Example:
- Single user: $500/year
- Team of 20: $8,000/year
- Department of 100: $30,000/year
Enterprise Add-Ons
Strategy:
Create premium features, services, or packages at higher price points.
Offerings:
- Premium support packages
- Implementation services
- Custom integrations
- Training programs
- SLA guarantees
Longer Commitments
Strategy:
Annual or multi-year contracts at discounted rates increase upfront deal size.
Example:
- Monthly: $1K/month = $12K/year
- Annual: $10K/year (lower total, higher upfront, better retention)
Decreasing Average Deal Size
Sometimes smaller deals are strategic.
Product-Led Growth
Lower friction, higher volume:
- Free tier to attract users
- Self-service upgrades ($50-$500/month)
- Inside sales for mid-tier upgrades
Market Expansion
Downmarket expansion:
- Build lightweight product for SMB
- Lower price point, faster sales cycle
- High volume self-service model
Measuring Deal Size Effectiveness
Win Rate by Deal Size
Larger deals typically have lower close rates.
| Deal Size | Typical Win Rate |
|---|---|
| <$25K | 25-35% |
| $25K-$50K | 20-28% |
| $50K-$100K | 15-22% |
| >$100K | 12-18% |
Implication:
Need larger pipeline for big deals. If close rate drops from 30% to 15% when deal size doubles, you need 2x pipeline to maintain velocity.
Sales Cycle by Deal Size
Larger deals take longer.
| Deal Size | Average Sales Cycle |
|---|---|
| <$25K | 1-2 months |
| $25K-$75K | 2-4 months |
| $75K-$150K | 4-7 months |
| >$150K | 6-12+ months |
Implication:
Deal size affects cash flow and forecasting. Long sales cycles require working capital to sustain operations.
ROI by Deal Size
Larger deals justify higher acquisition costs.
CAC Payback Formula:
CAC Payback Period = CAC / (Deal Size × Gross Margin)
Example:
- $20K deal size, 80% margin: $16K gross profit
- $5K CAC
- Payback: 5,000 / 16,000 = 3.75 months
Common Deal Size Mistakes
Chasing Too Large:
Going enterprise before your product, team, and processes are ready wastes resources and burns reps.
Chasing Too Small:
Focusing on tiny deals limits growth. You can't scale to $100M ARR with $5K average deal size (would need 20,000 customers).
Ignoring Distribution:
Average of $30K with 10 deals at $10K and 1 deal at $200K is misleading. Understand your distribution.
Wrong Sales Model:
Using inside sales for $100K deals (can't close) or field sales for $10K deals (economics don't work).
Static Targeting:
Not evolving ICP as product matures. Early-stage products target smaller deals, scale into larger segments over time.
Key Takeaways
- Average deal size = Total closed-won value / Number of closed-won deals
- SMB: $5K-$15K, Mid-Market: $15K-$50K, Enterprise: $100K-$500K+
- Larger deals = longer cycles, lower close rates, higher quotas
- Median often more insightful than average (outliers skew)
- Increase through: larger targets, multi-threading, enterprise add-ons, longer contracts
- Win rate declines as deal size increases
- Match sales model to deal size (inside for lower, field for higher)
- Track deal size distribution, not just average
- Ensure economics work: CAC payback period must be reasonable
- Product maturity determines viable deal size range
Related Terms
A/B Testing
Testing two versions of an email, subject line, or landing page to see which performs better.
ABC (Always Be Closing)
Traditional sales mindset focused solely on closing deals. Modern approach: Always Be Connecting.
ABM (Account-Based Marketing)
Marketing strategy treating individual accounts as markets. Highly personalized campaigns for high-value targets.
ABS (Account-Based Selling)
Sales approach targeting specific high-value accounts with personalized outreach. Inverts traditional funnel.
