Average Order Value: Formula & Tips

What is Average Order Value?

Average Order Value, also known as AOV, refers to the average amount spent by a customer per order on your e-commerce site. It's one of the most tracked metrics by online merchants.

This KPI measures the monetization capacity of each transaction. A high AOV means your customers are buying more products or more expensive products with each visit.

For e-commerce businesses, AOV directly impacts:

• Profitability per order (margin after logistics costs)
• Return on advertising investment
• LTV (Customer Lifetime Value)

Optimizing your AOV is often more profitable than increasing traffic: you capitalize on visitors you've already acquired.

How to Calculate Average Order Value?

The AOV formula is simple and universal.

Basic AOV Formula

AOV = Total Revenue / Number of Orders

Example: If your store generates $75,000 in a month with 1,500 orders, your AOV is $50.

Calculation by Segment

For more actionable insights, calculate AOV by:

• Traffic source: Google Ads vs SEO vs Email
• Product category: identify your most profitable ranges
• Customer type: new vs returning
• Device: mobile vs desktop

These segmentations reveal targeted optimization opportunities.

Average vs Median Order Value

Watch out for extreme values! A few large orders can artificially inflate the average. The median order value (the value that splits your orders into two equal halves) gives a more realistic picture.

Why is AOV Crucial for Your E-commerce?

Average Order Value impacts your entire economic equation.

Make Each Order Profitable

Each order has fixed costs: preparation, packaging, shipping. A higher AOV dilutes these costs and improves your net margin per order.

Example: $5 in fixed costs on a $30 order = 17% of revenue. On a $60 order = 8% of revenue.

Improve Your ROAS

Your acquisition cost remains the same whether the customer orders $40 or $80. Doubling the AOV doubles your return on ad spend (ROAS).

Boost LTV with No Extra Effort

AOV is a direct multiplier of Lifetime Value. Increasing AOV by 20% mechanically increases LTV by 20%.

Fund Free Shipping

Knowing your precise AOV allows you to set a profitable free shipping threshold, typically 20-30% above the current average order value.

How to Increase Your Average Order Value?

Here are the most effective strategies to increase your AOV.

Upselling: Offer a Superior Product

Upselling involves directing customers toward a premium version of the product they're viewing:

• Higher range with more features
• Larger format at advantageous unit price
• Version with extended warranty

Cross-selling: Sell Complementary Items

Cross-selling offers relevant complementary products:

• "Customers also bought..."
• Accessories associated with the main product
• Products from the same collection

Bundle Offers and Packs

Bundled offers encourage buying more:

• Discovery pack with discount
• "Buy 2 get 1 free"
• Themed gift sets

Progressive Thresholds

Create incentive tiers:

• Free shipping from $X
• -10% at $80, -15% at $120
• Free gift above a certain amount

How Review Collect Helps You Increase Your AOV

Review Collect contributes to optimizing your Average Order Value in several ways.

Build Trust to Trigger Purchases

Customer reviews remove purchase barriers. A confident visitor is more likely to:

• Add additional products
• Choose the premium version
• Complete their cart without hesitation

Reviews on Complementary Products

Reviews often mention products used together. These authentic verbatims are more convincing than algorithmic recommendations.

Social Proof on Bundle Offers

Displaying reviews specific to packs and gift sets reassures customers about the relevance of bundled offers.

Identify Popular Product Associations

Review analysis reveals which products your customers naturally buy together. These insights fuel your cross-sell strategies.

By combining social proof and optimized customer experience, Review Collect creates ideal conditions to increase your average order value.