What is average order value (AOV)
Also known as: AOV, average ticket, average transaction value
Average order value (AOV) is the average amount of each sale in a period: revenue divided by the number of orders. If a store made $30,000 from 300 orders, its AOV was $100. It shows how much each customer spends per purchase and is one of the fastest revenue levers, because it raises revenue without needing more customers.
AOV = revenue in the period ÷ number of orders in the period
Always use the same rules: with or without shipping, with or without discounts and returns.
A coffee bean store sold 1,200 orders in a month and made $84,000. AOV was $84,000 ÷ 1,200 = $70.
The store started offering free shipping over $90 and a bundle with a grinder and two coffees. The next month, with the same number of orders, AOV rose to $82 and revenue to $98,400: 17% more with no new customers.
Why AOV changes your ad math
How much a company can pay to win a sale depends on what that sale is worth. With a $70 AOV and a 40% margin, each order leaves $28 to pay for ads and profit. With a $120 AOV and the same margin, it leaves $48. The same campaign that was losing money can become profitable just because each order got bigger.
That is why AOV, conversion rate and cost per acquisition have to be read together: improving any of the three improves media results.
Ways to raise AOV
| How it works | Watch out | |
|---|---|---|
| Free shipping over a threshold | Customers add items to reach the minimum | Set the threshold a little above current AOV |
| Bundles | Products used together, at a set price | The bundle has to make sense to the customer |
| Cross-selling | Suggesting a complementary item | Irrelevant suggestions become noise |
| Upselling | A fuller version of the same product | Do not push what the customer does not need |
| Volume discounts | Buy 3, pay less per unit | Can cut margin more than it adds |
AOV and LTV
AOV looks at one purchase; LTV looks at all of a customer's purchases over the relationship. A low-AOV customer who buys every month can be worth more than a high-AOV one who buys once. The two complement each other: AOV shows the value of each trip to the checkout, and LTV shows how many times the customer comes back.
Where AOV misleads
- Averages hide groups. A few very large orders pull the average up. Also look at the median and the distribution of orders.
- Product mix. A promotion on a cheap product lowers AOV and can raise total profit if it brings in new customers.
- Comparing different periods. Holidays and Black Friday shift AOV for reasons that do not repeat the rest of the year.
Frequently asked questions
What is average order value?
The average amount of each sale in a period, calculated by dividing revenue by the number of orders.
How do you calculate AOV?
Divide revenue for the period by the number of orders in the same period. $50,000 from 500 orders is an AOV of $100.
What does AOV stand for?
AOV stands for average order value, the average amount spent per order.
How can I increase AOV?
With free shipping over a threshold, bundles, complementary product suggestions and fuller versions of the product, always with offers that make sense to the customer.
Is a higher AOV always better?
Not always. A cheaper offer that lowers AOV can raise total profit if it brings in more customers or more repeat purchases.
Related terms
- LTVLTV (lifetime value, also called CLV) is the value a customer generates for a business over the entire time...
- ROASROAS (return on ad spend) is how much revenue your campaigns generated for each dollar spent on media. A ROAS...
- CACCAC (customer acquisition cost) is how much a business spends, on average, to win each new customer. You add...
- Conversion rateConversion rate is the percentage of people who took the desired action out of everyone who had the chance...
- KPIA KPI (key performance indicator) is a number chosen to show whether a business is reaching a specific goal...
- ROIROI (return on investment) is the percentage that shows how much an investment earned beyond what it cost...
Rodrigo Fávaro
Founder of ROO3, a marketing and technology agency in São José do Rio Preto, Brazil. Builds AI products running in production (Tobia, gerar.app, Pense Mercado) and maintains the AI Benchmark, a public ranking of AI models.
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