What is average deal size?
Average deal size is the total value of won deals divided by the number of deals won in a period. It is one of the four inputs to sales velocity. In services businesses, define value first: first-year value, total contract value and annualized agreement value each give a different answer. Pick one and hold it constant.
Why it matters to a revenue leader
Deal size moves revenue as much as deal count does, and an average can hide problems. A rising average can mean better pricing and broader scope, or one large project masking a slide in core work. A falling average can mean discounting or a drift toward smaller customers. Look at the median and the mix by deal type next to the mean. For a PE-backed services company, a steady rise in average agreement value at stable win rates is evidence that pricing and scope work is landing.
How to calculate it
Average deal size = total value of won deals ÷ number of won deals, for one deal type and one period.
Common mistake: mixing one-time projects with recurring agreements, which makes the average swing with a single large job.
Example
Fictitious numbersA mechanical services company won 40 deals last quarter worth $2.0M, an average of $50,000. One $600,000 retrofit project is in that total. Without it, the other 39 deals averaged about $35,900, which is the better guide for planning the core business.
"Is our average deal size rising because of price and scope, or because of one or two large jobs?"
Sources
- Sales Velocity Is The Most Important Metric You Aren't Tracking checked 9 Oct 2026