Average Deal Size
Average Deal Size
Average deal size measures the mean revenue per closed deal, helping billing and RevOps teams forecast revenue, allocate resources, and structure pricing.
January 24, 2026
What is Average Deal Size?
Average Deal Size (ADS) is the mean revenue value of all closed-won deals over a specific period. It quantifies how much your typical customer commits per transaction, whether through a one-time purchase, annual contract, or subscription agreement.
A SaaS company closing five $20,000 annual contracts has the same total revenue as one closing fifty $2,000 deals, but the operational implications differ substantially. The first operates in the enterprise space with longer sales cycles and high-touch sales processes. The second runs a volume play requiring automation and self-service infrastructure.
Related Terms
Average Contract Value (ACV) - specifically for annual contracts
Average Selling Price (ASP) - more common in product sales
Average Order Value (AOV) - standard in e-commerce contexts
The Formula
The calculation is straightforward:
Example Calculation
A billing team closed these deals last quarter:
3 enterprise deals at $50,000 each
7 mid-market deals at $15,000 each
15 SMB deals at $3,000 each
Why Average Deal Size Matters for Billing and RevOps
Average deal size drives critical operational decisions beyond simple revenue measurement.
Revenue Forecasting and Capacity Planning
Your ADS directly impacts how you structure billing operations. A $50,000 average deal size typically means you need robust contract management, multi-stakeholder approval workflows, and sophisticated usage tracking. A $500 ADS suggests self-service billing and automated invoicing should be priorities.
Billing Complexity by Deal Size
Deal Size | Typical Billing Requirements | Common Challenges |
|---|---|---|
< $1,000/month | Simple subscription, credit card payments | Payment failures, involuntary churn |
$1,000-10,000/month | Annual contracts, NET terms | Invoice disputes, usage reconciliation |
> $10,000/month | Custom terms, usage-based components | Complex approval chains, contract amendments |
Resource Allocation
Your average deal size determines optimal team structure. Companies with enterprise-heavy portfolios often need dedicated billing analysts per account. SMB-focused operations require investment in automation to handle transaction volume efficiently.
Approaches to Increase Average Deal Size
Value-Based Pricing Tiers
Consider pricing based on customer outcomes rather than input metrics like seats. Finance teams purchasing billing software care about invoice processing capacity and payment collection rates, not user licenses.
For example, shifting from per-user pricing to invoice volume tiers aligns your pricing with the value customers actually receive.
Usage-Based Components
Pure subscription pricing can limit revenue expansion as customers grow. Hybrid models combining base fees with usage charges grow naturally alongside customer success.
A common structure:
Base subscription fee for platform access
Per-transaction or per-unit charges for usage
Premium feature add-ons
Annual Prepayment Incentives
Structure discounts to encourage larger upfront commitments:
This shifts your effective deal size from a monthly transaction to an annual commitment.
Usage-Based Expansion Triggers
Monitor usage patterns to identify expansion opportunities:
Customers approaching plan limits
Consistent overage charges over multiple billing periods
New departments or teams onboarding
Integration with enterprise systems like ERPs
Technology Considerations
CRM Integration
Connect deal data to billing systems to track values, customer segments, and buying patterns. This integration helps identify which customer profiles correlate with higher ADS.
Billing Platform Capabilities
Flexible pricing models, usage tracking, and automated invoicing directly impact your ability to capture value. Platforms supporting hybrid pricing models (subscription plus usage) provide more options for deal structuring.
Analytics and Reporting
Visualize ADS trends by segment, product line, and acquisition channel. Pattern recognition in successful large deals can inform pricing strategy adjustments.
Common Pitfalls
Over-Reliance on Discounting
Aggressive discounting to accelerate deal closure can set problematic precedents. A discount offered during initial sale often becomes the expected baseline for renewals and expansions.
Ignoring Customer Acquisition Cost
Your ADS must exceed CAC by healthy margins for sustainable unit economics. If acquisition costs exceed deal size, even high retention rates may not recover the investment.
Misaligned Sales Compensation
Sales teams compensated purely on deal count will naturally optimize for smaller, faster deals. Compensation structures should balance volume and value targets.
ADS Across Business Models
SaaS Subscription
Focus on Annual Contract Value rather than monthly figures when comparing deals. Track expansion revenue separately from new business ADS to understand growth dynamics.
Usage-Based Pricing
Monitor both committed contract value and actual usage. Customers often exceed their committed minimums, so tracking realized revenue against contracted amounts provides useful insight.
Marketplace and Transaction Models
Include transaction fees in ADS calculations. A payment processor's take rate on merchant volume represents meaningful deal value beyond any subscription fees.
Implementation Steps
Audit Current State: Calculate ADS by customer segment, product line, and acquisition channel
Define Targets: Based on your cost structure and market position, establish ADS thresholds
Implement Tracking: Ensure your billing system captures deal values accurately across all revenue streams
Align Teams: Train sales on value-based positioning rather than feature comparison
Monitor Trends: Review ADS monthly to identify shifts and adjust pricing strategy accordingly
Average deal size optimization is fundamentally about aligning your pricing and packaging with the value customers receive. For billing teams and RevOps professionals, understanding and influencing this metric supports sustainable, predictable revenue growth.