
What is a Deal Size?
Deal Size Brief Overview

In simple terms, deal size is like deciding how much money a company will make from one big sale. For kids, imagine selling a big toy set for $50. That 50 dollars is basically your deal size.
Why Deal Size Matters in Business
Key Points on Deal Size

1. Understanding Different Deal Sizes
- What It Is: Deal sizes can vary greatly depending on the type of business and customer. Some deals are small, like when a customer buys a single product, while others are huge, like a company buying software for an entire corporation.
- Why It’s Important: Knowing the different deal sizes helps companies create tailored strategies for each deal. Small deals might require less time and resources, while big deals often need a lot of attention and multiple approvals.
- How to Do It: Companies can categorize their deals into small, medium, and large, based on the deal size. Sales teams can then prioritize which deals to focus on depending on their revenue goals.
- Example: A famous sales strategist, Aaron Ross (Author of Predictable Revenue), says that understanding different deal sizes lets companies decide where to invest their time and resources for maximum return.
2. How Deal Size Affects Sales Forecasting
- What It Is: Sales forecasting is the process of predicting how much money a company will make in the future. Deal size plays a critical role in these forecasts because bigger deals contribute more to the total revenue.
- Why It’s Important: Accurate forecasting helps companies make informed decisions about hiring, budgeting, and resource allocation. Knowing which big deals are in the pipeline allows companies to anticipate revenue and plan accordingly.
- How to Do It: Sales teams often use historical data to estimate deal sizes and project future revenue. They also consider industry trends and past customer behavior.
- Case Study: HubSpot, a leader in inbound marketing, noticed that when their sales team started focusing on deal size in forecasting, their projections became more accurate, allowing them to optimize spending and increase profits.
3. Negotiating Deal Size
- What It Is: Negotiation is when a company discusses the terms of a deal with the customer to reach an agreement that works for both sides. During negotiations, the deal size can increase or decrease depending on what’s agreed upon.
- Why It’s Important: Skillful negotiation can lead to a larger deal size, bringing in more revenue. It also helps companies set boundaries and create a fair deal structure.
- How to Do It: Companies can increase deal size by highlighting additional benefits of their products or services. Sales teams can offer premium features or bundles to encourage customers to spend more.
- Expert Insight: Grant Cardone, CEO of Cardone Capital, emphasizes that negotiation is an art that requires understanding customer needs and presenting a compelling value. He says, “The best negotiators aim for a win-win situation that can expand the deal size without making the customer feel pressured.”
4. Influence of Deal Size on Customer Acquisition Cost (CAC)
- What It Is: Customer acquisition cost (CAC) is the money a company spends to acquire a new customer. Large deal sizes can help recover CAC faster because the revenue from a big deal often covers the expenses involved in securing that customer.
- Why It’s Important: If a company consistently achieves larger deal sizes, it can lower the CAC, making each customer more profitable.
- How to Do It: Sales teams can identify high-potential customers who are likely to buy more, then focus on building strong relationships with them. This helps increase the deal size while reducing the cost of acquiring similar-sized customers.
- Data Point: According to Forrester Research, companies that strategically target larger deals have seen their CAC reduce by up to 15%, as larger deals spread the cost across more revenue.
5. Deal Size and Customer Lifetime Value (CLTV)
- What It Is: Customer Lifetime Value (CLTV) is the total revenue a company expects to earn from a customer over the entire period of their relationship. Bigger initial deal sizes can lead to a higher CLTV, making each customer more valuable.
- Why It’s Important: Maximizing CLTV helps companies focus on long-term profitability rather than short-term gains. It encourages businesses to invest in quality products and customer relationships.
- How to Do It: By focusing on upselling and cross-selling, sales teams can increase the initial deal size, leading to a higher CLTV.
- Case Study: Salesforce, a leader in CRM software, reports that increasing initial deal sizes through value-added services has led to a 20% increase in their overall CLTV, as clients tend to stay longer and invest more.
6. Strategies to Grow Deal Size
- What It Is: Companies often employ various strategies to grow the deal size, such as bundling services, offering premium plans, or customizing offers based on customer needs.
- Why It’s Important: Growing the deal size with each customer helps increase overall revenue without necessarily needing to acquire more customers.
- How to Do It: Sales teams can bundle products or offer exclusive discounts on larger purchases to encourage customers to buy more at once. Customized packages tailored to client needs are also effective.
- Example: In his book The Challenger Sale, Matthew Dixon (Chief Product & Research Officer at Tethr) explains that guiding customers to see the value in a larger purchase often leads to higher deal sizes. He recommends that companies train their sales teams to focus on the customer’s specific needs to suggest larger deals.
7. Tracking and Analyzing Deal Size Trends
- What It Is: Analyzing past deals can help businesses understand trends in deal size, like which products have larger deal sizes or which customer segments are willing to spend more.
- Why It’s Important: Tracking deal size trends gives companies insight into what’s working and what’s not, allowing them to refine their strategies and target bigger deals.
- How to Do It: Companies can use CRM tools to track and analyze deal sizes, helping them see which deals are the most profitable and which customers offer growth opportunities.
The Role of Sales Strategy in Deal Size

Sales strategies are like game plans that guide how a company approaches potential customers and tries to increase the value of each sale, also known as the “deal size.” Here are some common sales strategies that help boost deal size:
- Value-Based Selling
- What It Is: Value-based selling is when sales teams focus on the benefits or “value” a product or service brings to a customer. For example, instead of just talking about the features of a software program, a salesperson might explain how it will save the customer time and money.
- Why It’s Important: By focusing on the value, customers may feel more confident about investing more money, leading to a bigger deal size.
- How to Do It: Sales teams can highlight specific ways their product can solve the customer’s problems and deliver long-term benefits.
- Example: Apple uses value-based selling when marketing its iPhone by focusing on its high-quality camera, security features, and ease of use, justifying the higher price.
- Solution Selling
- What It Is: Solution selling involves understanding the customer’s needs deeply and offering a comprehensive solution rather than just a single product.
- Why It’s Important: When customers see a product as a solution to their challenges, they’re often willing to invest more, which increases the deal size.
- How to Do It: Sales teams ask questions to understand the customer’s pain points, then explain how their product can provide the solution.
- Tip: Think of it like a doctor diagnosing a problem before suggesting the right medicine. This approach helps customers feel that the product was made just for them.
- Upselling and Cross-Selling
- What It Is: Upselling means encouraging a customer to buy a more expensive version of a product, while cross-selling suggests additional products.
- Why It’s Important: These strategies increase the total deal size by adding value or complementary items to the original purchase.
- How to Do It: For example, if someone buys a laptop, the salesperson might suggest adding extra memory or an extended warranty.
- Case Study: Amazon is excellent at cross-selling; whenever you add something to your cart, they suggest “Frequently Bought Together” items, which often leads to a larger sale.
Impact of Sales Enablement on Deal Size

Sales enablement involves providing salespeople with tools, training, and information to improve their ability to close larger deals. Here are ways it impacts deal size:
- Sales Enablement Tools
- What It Is: These are tools like CRM (Customer Relationship Management) software that help sales teams manage relationships and identify opportunities to close larger deals.
- Why It’s Important: CRM tools make it easier for salespeople to keep track of customer interactions and recognize patterns that might lead to bigger deals.
- How to Do It: Sales teams use CRM to store data on each customer, which can help in planning future sales pitches.
- Example: Salesforce, a leading CRM tool, has helped companies increase their average deal size by 15% by giving sales teams insights into customer preferences and needs.
- Product Knowledge
- What It Is: Product knowledge means understanding a product’s features, benefits, and uses in detail.
- Why It’s Important: Well-informed salespeople can explain the product more effectively, making customers see its true value and agree to a higher deal size.
- How to Do It: Companies should invest in training sessions to improve the product knowledge of their sales teams.
- Expert Insight: Daniel Pink, a renowned author and sales expert, notes that “Customers are more likely to trust and buy from salespeople who know their product well.”
- Sales Coaching
- What It Is: Sales coaching involves guiding sales teams to improve their skills, especially in handling objections and closing larger deals.
- Why It’s Important: Coaching helps salespeople gain the confidence and techniques they need to handle negotiations, ultimately leading to larger deal sizes.
- How to Do It: Sales leaders can provide regular coaching sessions or pair new hires with experienced mentors.
- Tip: Think of it like sports coaching—practicing and refining skills makes salespeople better at scoring big wins.
Measuring and Tracking Deal Size

To grow deal size, companies need to measure and track it. By monitoring these metrics, they can understand what’s working and what needs improvement.
- Key Performance Indicators (KPIs)
- What It Is: KPIs are metrics like average deal size, win rate (how many deals are closed successfully), and sales cycle length (time it takes to close a deal).
- Why It’s Important: Tracking KPIs shows sales teams where they can improve to achieve larger deals.
- How to Do It: Sales managers set specific goals for each KPI, like aiming to increase the average deal size by 10% over the next quarter.
- Data Insight: A study by McKinsey found that companies tracking their KPIs increased deal sizes by 20% on average.
- Salesforce Automation
- What It Is: Salesforce automation is when companies use CRM tools to automate repetitive tasks, like tracking customer interactions, scheduling follow-ups, and updating sales records.
- Why It’s Important: Automation saves time and ensures no potential opportunity for a large deal slips through the cracks.
- How to Do It: Many CRMs, like Salesforce, allow companies to automate these tasks, helping them keep a closer eye on high-value deals.
- Data-Driven Insights
- What It Is: Data-driven insights come from analyzing past deals to understand which factors lead to bigger deals.
- Why It’s Important: Companies can predict future deal sizes by recognizing trends and patterns in past data.
- How to Do It: Sales managers analyze closed deals to identify which products, customer types, or selling techniques led to the largest deal sizes.
Example: By analyzing data, IBM noticed that its highest deal sizes came from a particular industry, helping it target more customers in that area
Challenges in Managing Deal Size
- Complex Sales Cycles
- What It Is: Complex sales cycles involve multiple steps, meetings, and approvals before a deal is closed.
- Why It’s Important: Longer sales cycles increase costs and may reduce profitability.
- How to Overcome It: Sales teams can streamline processes by focusing on high-priority clients and maintaining clear communication.
- Example: Oracle often deals with lengthy sales cycles but manages them by breaking down each step and staying in touch with decision-makers regularly.
- Price Pressure
- What It Is: Price pressure occurs when customers negotiate for lower prices, which can reduce the deal size.
- Why It’s Important: If companies lower prices too much, they might not make a profit.
- How to Overcome It: Sales teams can justify the price by explaining the product’s value and how it saves money in the long run.
- Expert Insight: Chris Voss, former FBI negotiator, suggests using “tactical empathy” in negotiations to understand the customer’s perspective while still standing firm on price.
- Economic Fluctuations
- What It Is: Economic downturns can affect customer budgets, leading to smaller deal sizes.
- Why It’s Important: Economic changes can impact customers’ willingness to spend, so companies need to adapt their strategies.
- How to Overcome It: Companies can offer flexible payment terms or adjust pricing strategies to accommodate customers’ budgets during tough economic times.
Future Trends in Deal Size
- Subscription Models
- What It Is: Subscription models are when customers pay regularly (e.g., monthly) instead of a one-time payment.
- Why It’s Important: Subscriptions provide a steady stream of revenue and can lead to larger deal sizes over time as customers renew.
- How to Do It: Companies can offer a monthly subscription instead of one-time sales to create a consistent income.
- Example: Netflix uses a subscription model, which has led to a high deal size over time as customers keep renewing their subscriptions.
- AI and Automation
- What It Is: AI-powered tools help sales teams identify bigger deal opportunities and automate tasks, freeing up time to focus on high-value deals.
- Why It’s Important: AI can analyze data faster than humans, helping sales teams spot trends and patterns that lead to larger deals.
- How to Do It: Companies can use AI tools, like chatbots and recommendation engines, to engage customers and guide them toward higher-value purchases.
- Tip: Think of AI like a smart assistant that helps sales teams make better decisions.
- Remote Selling
- What It Is: Remote selling involves selling products over the phone or internet without meeting customers face-to-face.
- Why It’s Important: With more people working remotely, companies need to adapt their sales strategies to make customers feel confident buying large deals virtually.
- How to Do It: Sales teams can use video calls, virtual demos, and online chat to connect with customers and answer their questions.
Case Study: Zoom, a popular video conferencing company, saw a huge increase in deal sizes as more businesses moved to remote work and needed reliable online meeting tools. By offering virtual demos and helpful onboarding, Zoom convinced customers to commit to long-term, high-value subscriptions
Tips for Optimizing Deal Size
- Target High-Value Customers: Focus on clients who are likely to make larger purchases. This could mean targeting bigger companies or customers with higher purchasing power.
- Offer Bundles and Premium Options: Packaging products together can increase the perceived value, encouraging customers to go for a larger deal.
- Build Trust with Customers: Strong relationships increase the likelihood of larger deals, as clients feel more comfortable making a significant investment.
- Highlight the Long-Term Value: Showing customers how a product or service benefits them in the long run can justify a higher deal size.
- Use Data to Make Decisions: Analyze past deals to see what worked and tailor future offers to replicate that success.