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# Sales Velocity Calculator

Contributor
Reviewed by Abhinash J
Editor

Published: April 11, 2023

Calculating Sales Velocity helps organizations gauge the health of their business and improve the effectiveness of their revenue teams by determining the rate at which leads move through the sales funnel to become paid customers.

Number of Opportunities

Total count of potential sales in a specific time period.
25000

Average Deal Value

Average amount of money generated from deals that have been finalized within a specific time frame.
\$
25000

Win/Conversion Rate

Percentage of successfully closed deals out of total opportunities.
%
26

Sales Cycle Length

Average time taken to close a deal from initial contact to closed won.
days
26
Sales Velocity Calculator
\$350,000

See how it's calculated

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## What Is Sales Velocity?

Sales velocity refers to the metric that shows how quickly leads and opportunities convert into sales and generate revenue for the company. It indicates the overall productivity of your sales department and helps identify which aspect of your sales process needs improvement.

There are four components that make up the sales velocity equation – the number of opportunities, average deal value, win rate, and sales cycle length. It helps in predicting future revenue so companies can appropriately allocate their budgets over a specific period of time.

## Four Components of Sales Velocity

1. Number of Opportunities: Opportunities refer to the qualified leads(by marketing and sales teams) in your pipeline, who have a higher chance of conversion.
1. Average Deal Value: Deal values refers to the average deal size of your product or service your prospects buy.
1. Win Rate: It is percentage of  the total number of sales divided by the number of opportunities.
1. Sales Cycle Length(in days): It is the total time taken (in days) for a lead to become a paid customer.

## Calculating Sales Velocity

The formula for calculating sales velocity is:

Sales Velocity = [Number of Opportunities x Average Deal Value x Win Rate] / Sales Cycle Length

For instance, if the number of opportunities is 150 with an average deal value of \$25000, with an average win rate of 35% and if the sales cycle length is 60 days, then:

Sales Velocity = [150 * \$25000 * 35%] / 60 = \$21,875

\$21,875 is the amount of money that passes through your sales pipeline every single day.

## Importance of Calculating Sales Velocity

1. A high sales velocity means you will gain more sales and revenue in less time. It helps understand the lead engagement strategies, know what’s working  and what’s not.

2. Sales velocity helps you compare your business sales against other companies, measure your reps’ effectiveness, and strategize accordingly to improve your team’s productivity.

3. Sales velocity helps accurately predict the future sales and determine how much resources need to be allocated to maximize output.

## 4 Ways to Increase Sales Velocity

By improving the four factors that affect sales velocity, you can increase your sales velocity rate.

### #1: Increase Sales Opportunities

Opportunities are qualified leads who are most likely to become a customer based on certain criteria. Focusing on high-quality leads rather than worrying about the number of leads will increase the chance of closing more deals. You can source quality leads through various strategies, including running ads, email marketing, and others.

### #2: Boost Average Deal Size

Increasing average deal size doesn’t simply mean increasing the price of your product – you will end up losing prospects. Instead, focus on identifying their pain points and figuring out the best bundle for them to increase the deal size.

### #3: Improve Your Win Rate

To improve your win rate, you need to capture and nurture high-quality opportunities. Besides, you can find out why prospects in your pipeline aren’t buying. Define clear steps for qualified leads, and address the pain points of your opportunities more effectively to improve win rates.

### #4: Shorten the Length of the Sales Cycle

Adopt suitable strategies to shorten the time it takes to close the deal. It doesn’t mean that you will push the prospects through the pipeline but rather, invest time in building relationships and train your sales team to become efficient in what they do. For instance, you can automate repetitive tasks, have a list of common customer objections and the ideal rebuttals, identify where the leads get stuck and take suitable actions to move the deals forward, and others.

Free Resource

Sales Velocity Calculator

Determine the speed at which your business is generating revenue and identify ways to increase your sales velocity with this Google Sheet Template.

What does sales velocity mean?

In simple terms, sales velocity refers to the measurement of how quickly the deals are moving in your sales pipeline. It  helps in accurately forecasting sales for a specific period so that you can allocate your resources and plan your inventory accordingly.

How do you calculate velocity in sales?

The formula to calculate sales velocity is to multiply the number of opportunities in your pipeline by the dollar value of your average deal size and your win rate. Then, divide the results by the sales cycle length. Alternatively,  enter all the component values into Salesken’s Sales Velocity Calculator and discover your sales pipeline effectiveness.

What strategies can help improve sales velocity?

The easiest way to improve sales velocity within your business include the following:

• Increase the number of sales opportunities you have
• Increase your average deal size