Deal value (also called deal size or opportunity value) is the monetary amount assigned to a sales opportunity. The value represents the potential or actual revenue from closing the deal. Deal value is fundamental for pipeline management, forecasting, and commission calculations. According to Gartner (2024), 67% of all forecast errors are directly related to inaccurate deal value recording.
Deal value impacts multiple aspects of the sales organization:
According to Salesforce (2024), companies with consistent deal value recording have 34% higher forecast accuracy.
TypeDescriptionExampleTCV (Total Contract Value)Total value over contract period$1,000/mo × 24 mo = $24,000ACV (Annual Contract Value)Annualized value$1,000/mo × 12 = $12,000ARR (Annual Recurring Revenue)Recurring revenue onlyExcludes one-time feesMRRMonthly recurring revenue$24,000 ÷ 12 = $2,000One-time valueNon-recurring amountsProduct sale: $50,000
Deal components:
MetricCalculationValueMRRFixed monthly$2,500ARR$2,500 × 12$30,000TCV (subscription)$2,500 × 36$90,000TCV (total)$90,000 + $20,000$110,000
Deal structure:
YearValueNoteYear 1$100,000Starter packageYear 2$120,000Incl. expansionYear 3$140,000Incl. expansionTCV$360,000Sum of all years
Commission calculations typically reference specific deal value metrics. According to Pavilion (2024), 58% of SaaS companies use ACV as the basis for commission, while 24% use TCV.
Adjustment for probability:
Weighted value = Deal Value × Win probability
DealValueStageProbabilityWeightedAcme Corp$80,000Proposal50%$40,000TechStart Inc$120,000Negotiation75%$90,000Global Systems$50,000Discovery25%$12,500
Define value metrics clearly: Document which metric counts for quota and which is used for commission calculation.
Keep values updated: Update as deals evolve—from initial estimate to proposal value to final contract value.
Separate components: Track different value types: recurring vs. one-time, new vs. expansion, product vs. services.
Avoid inflation: Use expected value, not best case. According to CSO Insights (2024), reps overestimate deal values by an average of 23%.
It depends on your compensation plan. Most SaaS companies use ACV or ARR, while traditional sales often use TCV.
Document whether commission is paid on first year value, average ACV, or full TCV. Be consistent across all deals.
Adjust the commission calculation based on final contract value. If commission has already been paid, there may be a need for correction.
Deal value is the foundation for sales metrics—it drives pipeline management, quota tracking, forecasting, and commission calculations. With Prowi, you can configure commission calculations based on any deal value metric and ensure accurate payouts.