Glossary · Sales
What is Average Order Value (AOV)?
Definition
Average order value (AOV) is the average amount a customer spends each time they place an order with your business.
AOV = total revenue ÷ number of orders
Why it matters
Raising AOV is one of the quickest ways to grow revenue without paying for more traffic. It also helps cover fixed costs like shipping and payment fees.
An online tea shop sees 500 orders in a month totaling $17,500, so AOV is $35. By offering free shipping above $45 and a bundle of three teas for $42, the owner nudges AOV to $41. With the same 500 orders, monthly revenue climbs to $20,500, about $3,000 more.
Test offers such as bundles, thresholds, and add-ons, and watch that margin per order improves along with revenue.
Common mistakes
- !Pushing add-ons that annoy shoppers and reduce the conversion rate.
- !Looking at AOV without checking margin, so higher revenue per order may not mean higher profit.
Frequently asked questions
What is Average Order Value (AOV)?
Average order value (AOV) is the average amount a customer spends each time they place an order with your business.
How do you calculate AOV?
AOV = total revenue ÷ number of orders
What mistakes do beginners make with AOV?
Pushing add-ons that annoy shoppers and reduce the conversion rate. Looking at AOV without checking margin, so higher revenue per order may not mean higher profit.
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