Average selling price
AY-ess-PEE
The average revenue per deal closed. Tells you whether you are selling to the right segment at the right price.
ASP is the average revenue per closed deal. Take total new business revenue and divide by the number of deals closed. If you closed 50 deals totaling $2.5M in new ARR, your ASP is $50k.
ASP tells you what market segment you are actually selling to, regardless of what your pitch deck says. If your ASP is $5k, you are in SMB territory. If it is $50k, you are mid-market. If it is $500k, you are enterprise. The go-to-market motion, sales team structure, and marketing strategy should match the segment your ASP reveals.
Rising ASP is usually a good sign. It means you are moving upmarket, selling bigger deals, or packaging your product more effectively. Falling ASP might mean you are losing enterprise deals and backfilling with smaller accounts.
Examples
A startup reviews its first year of sales.
40 deals closed for $800k total new ARR. ASP is $20k. The CEO wanted to be enterprise but the product is selling mid-market. The team adjusts positioning and hiring accordingly.
ASP rises after launching an enterprise tier.
Last year ASP was $12k across 200 deals. This year, 30 enterprise deals at $100k ASP lifted the blended ASP to $28k across 180 deals. Total new ARR nearly doubled.
A product-led company struggles with ASP.
Thousands of self-serve customers pay $29/month ($348/year). A handful of enterprise customers pay $50k/year. Blended ASP is $2,100 but the distribution is bimodal. The company needs different motions for each segment.
In practice
Read more on the blog
Frequently asked questions
What is the difference between ASP and ACV?
ASP is the average across all deals closed in a period. ACV is the annual value of a specific contract. If you close three deals at $20k, $50k, and $80k ACV, your ASP is $50k.
How do you increase ASP?
Sell to larger companies, bundle more features into higher tiers, add professional services, or sell multi-year commitments with annual price increases baked in. Each approach has different implications for sales cycle length and team structure.
Related terms
The annualized value of a single customer contract. Tells you about individual deal size, while ASP tells you the average across all deals.
The annualized value of your active subscription contracts. The heartbeat metric of every SaaS business.
The total dollar value of deals your sales team is actively working. The most important leading indicator in any sales organization.
The percentage of pipeline that converts to closed deals. If you have $1M in pipeline and close $250k, your win rate is 25%.
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