Average Sales Price
What is Average Sales Price?
Average sales price, also known as average deal size, refers to the mean monetary value of closed won opportunities during a specific period. It represents the typical revenue generated from individual deals that have been successfully closed by the sales team.
Why is Average Sales Price important?
Tracking the average sales price is crucial for several reasons. First and foremost, it provides valuable insights into the revenue potential of the company's sales efforts. By understanding the average deal size, businesses can better forecast and plan their financials, set realistic revenue targets, and assess the overall health of their sales performance. Moreover, analyzing changes in the average sales price over time can reveal essential market trends and shifts in customer behavior. For instance, a significant increase in the average sales price may indicate successful upselling and cross-selling strategies or the acquisition of high-value clients. On the other hand, a declining average sales price might raise concerns about discounting practices or a shift in the customer base towards lower-priced offerings. Additionally, the average sales price can aid in sales team performance evaluation. It allows sales managers to identify top-performing representatives who consistently close high-value deals and those who might need additional support or training.
How is Average Sales Price calculated?
To calculate the average sales price, you need to sum up the total value of all closed won opportunities and then divide that sum by the number of closed won deals for a specific period. Bookings are the simple answer to the question “how much revenue is the company successfully generating?” It is critical to monitor this metric in order to understand the top-line results that the company is achieving and to react accordingly. Using different filters and breakdowns makes it easier to identify the types and amount of revenue generated per region, segment or product, and act to remedy any deficiencies and leverage strong performance.
Average Sales Price =Sum of Closed-Won Opportunities' Contract ValueNumber of Closed-Won Opportunities