What is SaaS Average Deal Size (ADS)? 

SaaS Average Deal Size (ADS) measures the average revenue generated from a closed deal. 

It is an important factor in evaluating the health and scalability of a SaaS business.

The ADS can vary significantly by company size, so it is reasonable to group ADS by ARR bracket for a more detailed analysis.

SaaS Average Deal Size (ADS) is calculated by dividing the total revenue from closed-won deals.

1. Identify the number of all the closed-won deals during a certain time period.
2. Apply the formula:
   

ADS = Revenue / Number of Deals.

The average deal size (ADS) in SaaS is crucial for understanding the:

• sales performance
• customer value
• effectiveness of marketing, pricing and sales policies
• deal dynamics
• product suitability for high-end customers (crucial for SaaS businesses) 

Average Deal Size (ADS) is a significant parameter in the SaaS model.

It is important because the ADS gives information on:

• whether the SaaS company’s pricing policy is directed to its long-term growth
• the effectiveness of the acquisition cost control strategies
• the targeted clients.

For instance, if a SaaS company is still in the early stages, it tends to focus on smaller deals to confirm the effectiveness of its product and market positions, while mature companies prefer large deals as a sign of maturity and the ability to compete with corporate clients. S

Strategies to increase the ADS include:

• different pricing structures
• usage-based models
• the creation of hard sells within the product to attract customers willing to upgrade or increase the number of existing services.

Typical Average Deal Size benchmarks vary significantly by market segment and go-to-market motion.

• SMB-focused SaaS companies often report average deal sizes ranging from $1,000 to $10,000
• mid-market companies typically fall between $10,000 and $50,000
• enterprise SaaS companies frequently exceed $50,000 per deal

ADS also differs based on factors such as:

• funding model
• sales motion
• target customer profile

As a result, Average Deal Size should be evaluated against companies of similar size, market focus, and industry, rather than relying on broad, generic averages.

Several factors significantly influence the Average Deal Size (ADS) in SaaS. These factors include:

• estrategia de precios
• mercado objetivo
• proceso de ventas
• the perceived value of the product.

Furthermore, elements like:

• mezcla de productos
• sales cycle length
• venta adicional/ventas cruzadas approaches

Intangibles like market leadership, propiedad intelectual, and the effectiveness of the management team can also impact ADS, making it a complex metric to predict.

SaaS companies can increase their Average Deal Size (ADS) through strategies like targeting higher-value customers, boosting customer loyalty, and optimizing pricing models.

These efforts lead to larger deals and greater profitability by focusing on high-impact solutions and premium offerings.