Average Order Value
Average Order Value (AOV) is the average dollar amount spent each time a customer places an order. It is calculated by dividing total revenue by the number of orders in a given period.
Also known as: AOV, average basket size, average transaction value
Formula
Total Revenue / Number of Orders
Why average order value matters
AOV directly impacts profitability because many costs - payment processing fees, shipping, packaging, customer support - are partially fixed per order. A higher AOV means those fixed costs are spread across more revenue, improving your margins on every transaction.
Raising AOV is often the fastest path to profitable growth because it does not require acquiring new customers or increasing traffic. Strategies like bundling, free shipping thresholds, cross-sells, and volume discounts can lift AOV with minimal additional cost.
Tracking AOV over time and across segments also reveals shifts in customer behavior. A declining AOV might indicate that discount-driven promotions are training customers to buy less at lower prices, while a rising AOV could reflect successful product mix optimization.
The newsletter
Join our KISS newsletter
One short read a week on what actually moves revenue, in a free email. Read by 10,000+ operators and founders.
No spam. Unsubscribe in one click.
How to calculate average order value
Divide total revenue by the total number of orders in the same period. Only count completed orders (exclude cancelled or fully refunded transactions). Some businesses also calculate AOV net of discounts and returns for a more accurate picture of realized revenue per order.
AOV Calculator
Total Revenue / Number of Orders
Average Order Value examples
A fashion retailer adds a "complete the look" recommendation widget to product pages, increasing AOV from $85 to $104 - a 22% lift - by suggesting complementary accessories.
Benchmark: Fashion ecommerce AOV typically ranges from $80-150; electronics $150-300; beauty/cosmetics $40-70
A SaaS company with a self-serve marketplace for add-ons tracks AOV on add-on purchases, discovering that customers who buy during onboarding spend 35% more per transaction than those who buy later.
How to Track in KISSmetrics
KISSmetrics automatically calculates AOV when you track purchase events with an order value property. Use the Revenue Report to view AOV trends over time and segment by traffic source, device type, or customer segment. Set up A/B tests on checkout flow changes and measure their impact on AOV directly.
Common Mistakes
- -Optimizing for AOV at the expense of conversion rate - aggressive upsells can increase AOV but reduce the percentage of visitors who buy
- -Setting free shipping thresholds too high, which can actually decrease total revenue by discouraging purchases
- -Not excluding outlier orders (like B2B bulk purchases) that can skew the average
- -Ignoring the relationship between AOV and return rate - higher AOV driven by adding unnecessary items often leads to more returns
Pro Tips
- +Set your free shipping threshold 15-20% above your current AOV to nudge customers to add more items
- +Use product bundling to increase AOV while giving customers perceived value through bundle discounts
- +Analyze AOV by device type - mobile shoppers often have lower AOV, presenting an optimization opportunity
- +Track AOV alongside items per order to distinguish between customers buying more items vs. buying more expensive items
- +Test "frequently bought together" recommendations on product and cart pages to lift AOV without being pushy
Related Terms
Average Items Per Order
Average items per order measures the mean number of individual products included in each completed transaction. It indicates how successfully your store encourages customers to buy multiple items in a single purchase.
Cross-Sell Rate
Cross-sell rate is the percentage of customers who purchase a complementary product or product from a different category in addition to their primary purchase. It measures the effectiveness of your strategies for expanding what customers buy.
Upsell Rate
Upsell rate is the percentage of customers who purchase a higher-priced version or upgrade of a product they were initially considering or currently using. It measures the success of strategies to move customers to premium options.
Revenue Per Visitor
Revenue per visitor (RPV) is the average revenue generated for each visitor to your website. It combines conversion rate and average order value into a single metric that measures the total monetary value of your traffic.
Cart Abandonment Rate
Cart abandonment rate is the percentage of online shoppers who add items to their shopping cart but leave the site without completing the purchase. It is one of the most critical ecommerce conversion metrics.
Further Reading
Build your business intelligence layer for free.
Every order resolved to the person who placed it, so repeat rate, order value and what a channel is actually worth come out of the same events rather than three tools that disagree.