AOV
Average Order Value
Quick definition
Average order value (AOV) is the average amount of revenue per order, calculated as revenue divided by the number of orders.
Formula
AOV = Revenue ÷ Number of Orders
Formula variables
- Revenue
- Revenue from orders in the period. State whether it is net of discounts and refunds and whether shipping and tax are included.
- Number of Orders
- The count of orders in the same period.
Worked example
- Revenue
- $75,000
- Orders
- 1,500
75,000 ÷ 1,500
Result: $50
The average order was worth $50. The figures are illustrative.
How to interpret it
AOV shows how much each order is worth. Raising it with bundles, thresholds or add-ons can increase revenue from the same traffic without raising acquisition cost.
It is an average, so a few very large orders can raise it without most customers spending more.
When it is useful
- Judging the effect of bundles, upsells and free-shipping thresholds.
- Working out how much acquisition cost an order can support.
- Segmenting customers by typical basket size.
Limitations
- Averages hide the spread of order sizes.
- Different treatment of discounts, refunds and shipping changes the result.
- A higher AOV does not mean higher profit.
Common mistakes
- Mixing gross and net revenue between periods.
- Optimising AOV at the cost of conversion rate.
- Ignoring outliers.