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Formula
Average Deal Size = Total Revenue from Deals / Number of Deals Closed
Know your metric
Importance of
Average Deal Size
Revenue Impact
Average deal size is a crucial metric for understanding the impact of individual sales on overall revenue, helping to prioritize efforts on more lucrative deals.
Strategic Decision-Making
Insights into average deal size can guide strategic decisions, such as resource allocation and sales targeting.
Market Positioning
It helps in assessing market positioning and the effectiveness of product or service pricing strategies.
Drawbacks of
Average Deal Size
Does Not Reflect Volume
A high average deal size is beneficial but doesn't reflect the volume of transactions, which can be equally important for revenue.
Potential for Misallocation
Focusing too much on increasing deal size might lead to neglecting smaller, yet profitable customer segments.
Market Limitations
In some markets, excessively focusing on increasing deal size could limit the number of potential customers willing or able to engage at higher price points.
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