Most ecommerce brands focus heavily on acquiring more customers. But one of the fastest ways to grow revenue is often overlooked: increasing the value of each order.
In other words, if you’re not optimizing and improving your average order value, you may be leaving money on the table.
Read on for a deep dive into average order value (AOV), including what it is, how to calculate it, what counts as a “good” AOV, and how ecommerce brands analyze and improve it.
Key takeaways:
Average order value is the average amount of money a customer spends when placing an order on your online shop.
Generally speaking, the more your customer is spending on an average order, the greater your profitability and your return on ad spend (ROAS). If you’re spending money on customer acquisition costs (CAC), you want AOV to be high to maximize the revenue from your spend.
Businesses track AOV in marketing because it’s a straightforward way to evaluate your company’s financial health.
A high AOV means you’re making more money from the customers you currently have, and that helps you avoid spending a lot more to acquire new customers. A high AOV helps if and when acquisition costs rise: You have a bit of a buffer to protect your margins.
Of course, you can learn from a low AOV, too: It might mean there are opportunities for your business to improve engagement, loyalty, or conversion rate. Keeping track of your AOV allows you to continue to iterate and improve.
So, how do you calculate AOV? There’s a simple AOV formula to follow:
AOV = your total revenue / your total number of orders
For example, if you earned $2,000 in total revenue from 400 orders, your AOV would be:
$2,000 / 400 = $5
In other words, each customer spends $5 per purchase on average.
AOV varies widely across industries, product categories, and price points. But generally, if you’re able to increase average order value, you’re also able to increase revenue, so the higher your AOV, the better.
What makes a “good” AOV is influenced by a number of factors, including manufacturing costs, shipping costs, product bundling, and more.
It might help contextualize your metrics to know the typical AOVs in some popular industries. Here are the top five median AOVs in ecommerce, based on our platform data over the last 365 days:
It makes some intuitive sense that encouraging bigger orders would be a good thing. But there are several different reasons why AOV is important for ecommerce shops.
AOV looks simple on the surface, but interpreting it correctly requires looking beyond a single average. Ecommerce brands often combine statistical analysis and customer segmentation to understand what’s really happening in their order data.
Mean, median, and mode, also called the three measures of central tendency, are different statistical ways of showing you where the midpoint of a data set is.
A few high-value orders can skew your AOV (aka your mean) upward. Considering median and mode help to reveal typical purchasing behavior and synthesize your data from different perspectives.
Another way to avoid skewed data is by calculating your mode-to-mean ratio, or MMR. This is a percentage calculated by dividing your mode order value by your mean order value. You use the result to determine which measure of central tendency will be the best representation of your customers.
MMR = Mode / Mean x 100
When your MMR is between 67 and 100 percent, your mean order value will be a better representation of your customers. When it’s between 0 and 66, your mode order value will be a better fit. Then, you can use this insight to make changes to pricing, segmentation, and other factors that will ultimately improve AOV.
Customer segmentation is the process of grouping customers by a shared characteristic to help you understand their behavior better. And segmentation analysis can help you look at AOV more effectively. With detailed segmentation, you’ll be able to quickly identify patterns relating to AOV among your most loyal customers, your most effective channels, and your best-performing products.
Here's how to analyze AOV various ways:
By customer type: If your AOV is high with new customers, that tells you your acquisition efforts are paying off. If your AOV is high with returning customers, they’re likely to be loyal and engaged. That might be a clue that a customer engagement tactic like a loyalty program is effective, for example.
By channel: A high AOV for paid search means your ads are driving profits. A high AOV for email means your customer base is engaged. And a high AOV from organic search means people intend to make a purchase. All of these insights can help you tailor your marketing efforts and allocate your marketing spend effectively.
By product category: If certain products aren’t selling, it might be time to think about strategically lowering the price. On the flip side, if other products are consistently part of higher-value orders, you can consider adding those to a bundle as a way to nudge customers toward converting on a higher-priced package deal.
By customer cohort: Cohort analysis groups customers by purchase date, allowing you to track the behavior of the cohort over time. When you look at AOV through this lens, you’ll see how a cohort’s behavior changes over their relationship with your brand, allowing you to make decisions about when and how to market to customers at different stages of the customer lifecycle (called customer lifecycle marketing).
Like with many ecommerce metrics, you shouldn’t just calculate AOV once and then forget about it. Regularly tracking AOV helps you get a clearer picture of your success and where you have room for improvement.
Depending on your business’s goals, you may want to monitor your AOV daily, weekly, or monthly. Monthly is typical, but more frequently may be helpful when you’re just starting your business to keep a close eye on your progress.
You’ll likely want to track AOV weekly when you’re running promotions or launching a new product to see how you’re performing in close-to-real-time. Monthly tracking will give you a better picture of consistent trends.
You might even compare AOV annually to factor in seasonality. For example, you might look at how your AOV changes around Black Friday and Cyber Monday sales from one year to another to help inform your upcoming strategy.
Now that you have a deeper understanding of the AOV meaning, you’re ready to explore ways to drive more revenue. Here are some helpful tips for how to increase AOV in ecommerce, grouped by category.
Pricing strategies to increase AOV all have to do with, you guessed it, the pricing of your products. Raising prices on specific products can boost AOV, but it can also make shoppers hesitate. So, many pricing strategies rely on other ways of encouraging shoppers to spend more. Here are a few examples:
You can also motivate shoppers with merchandising techniques, such as encouraging them to add related items to their cart or upgrade what’s already in their cart to a higher-end version. Here’s how:
Personalizing the shopping experience can lead to larger order sizes. Leveraging past purchases or browsing behavior can encourage customers to add additional items to their carts. Here are a few ways to try that:
Promotional strategies typically rely on feelings of urgency and scarcity to drive customers to purchase more. Don’t underestimate the motivating power of the fear of missing out on a timely promotion or a special offer to drive up AOV. Examples include:
For a full breakdown of AOV improvement tactics, see our guide on how to increase average order value.
In the pursuit of higher revenue, it’s possible you may be making some mistakes along the way that could backfire and end up hurting your AOV or your profits.
One common misstep is called discount inflation. This is when you’re constantly discounting your products to keep people shopping during tough economic times when customers are otherwise cutting back on spending. If your offerings are nearly always discounted, you’ll cut into your profits over time, and train your audience not to pay full price.
Watch out for free shipping thresholds that are too low, too. If yours isn’t high enough, this perk won’t actually increase AOV, you’ll just be giving your customers the gift of free shipping. A good rule of thumb is to set a free shipping threshold about 5 to 15 percent higher than your current AOV, according to MarTech.
Pay close attention to data attribution, and make sure the model you’re using isn’t introducing errors that might skew your understanding of your AOV. For example, last-click attribution only gives credit to the final touchpoint in your customer journey and undervalues earlier stages of your marketing funnel. Triple Whale’s Total Impact Attribution Model can give you deeper insight into the effects of your campaigns at every stage and across all channels.
Finally, remember that a higher AOV alone isn’t the goal. Sometimes called cosmetic or vanity growth, inflated AOV without profitability gains won’t help in the long run. This can occur when you’re not aware of how much more you’re spending to drive those higher order values, such as with excessive discounting, low-margin upselling, or increased returns. That’s part of the reason it’s always a good idea to consider your AOV in the context of other ecommerce benchmarks.
Just like your customer data, your AOV can work harder for you when it isn’t siloed. You should consider it one metric of many that you track regularly, and analyze it in relation to several other benchmarks of success.
For example, it’s essential to compare your AOV with your contribution margins, because AOV alone ignores costs. If you focus solely on boosting your AOV without factoring in costs, you could end up cutting into profits.
Another way of looking at costs would be to compare your AOV and your CAC. You need to consider the money you spend on acquiring new customers when you think about increasing AOV, otherwise you could end up spending too much and hurting your margins.
Keep an eye on conversion rate, too. Sometimes upselling and bundling become too expensive, driving customers away, so AOV might increase while conversion rate decreases. The best case scenario is having both a high AOV and a good conversion rate for long-lasting customer loyalty.
Similarly, you also want a strong AOV and a strong CLV, or customer lifetime value. These metrics are similar, but CLV reflects the value of a customer to your company over an unlimited period, not just throughout one purchase, like AOV. Most of the time, the higher your AOV, the higher your LTV, too.
If this all sounds like a lot to manage, that’s because it can be. But you don’t have to shoulder the effort alone. There are many tools and apps that can help you navigate AOV.
AOV doesn't just play a big role in your business, it's the backbone. Improving this metric means you generate more revenue from existing customers, helping you to grow your business without throwing heaps of money at marketing and advertising.
AOV, or average order value, is your total revenue divided by your total number of orders. It gives you a window into customer behavior, allows you to understand purchasing habits, and points you toward strategies to make each sale more profitable.
It also directly affects your bottom line. A higher AOV means more revenue without having to increase spend on customer acquisition, service, delivery, or conversion.
But it’s also important to consider other key ecommerce metrics in addition to AOV to have the full context of how your business is performing, such as ROAS, LTV, and CAC. Here at Triple Whale, we can help with all of it: Our pre-built retention dashboards and AI agents monitor purchase patterns, predict lifetime value, and surface personalized recommendations that keep your most valuable customers coming back. Book a demo today!
AOV, or average order value, tells you how much money, on average, a customer spends per order with your brand. Tracking this number over time gives you a gut check on the financial health of your brand. Generally, a higher AOV means higher profitability, because shoppers are spending more.
AOV does not typically include taxes, shipping, or other costs. That’s one of the reasons why tracking AOV alone doesn’t give you the full picture of your brand’s profitability. It’s a good idea to analyze your AOV in relation to ecommerce metrics that track costs, such as your ROAS and your contribution margins.
Average order value is a measure of the value of completed transactions. ACV, or average cart value, is a measure of the value in a customer’s cart, whether or not that transaction is ultimately completed. ACV tells you more about intent than revenue.
Broadly speaking, a higher AOV typically means higher profitability. Customers spend more per order, on average, so you make more. But this is a bit oversimplified and isn’t guaranteed: You have to avoid falling into any common AOV traps that can hurt profits and monitor your AOV and other ecommerce metrics regularly to make sure you’re staying on track.
Most ecommerce brands focus heavily on acquiring more customers. But one of the fastest ways to grow revenue is often overlooked: increasing the value of each order.
In other words, if you’re not optimizing and improving your average order value, you may be leaving money on the table.
Read on for a deep dive into average order value (AOV), including what it is, how to calculate it, what counts as a “good” AOV, and how ecommerce brands analyze and improve it.
Key takeaways:
Average order value is the average amount of money a customer spends when placing an order on your online shop.
Generally speaking, the more your customer is spending on an average order, the greater your profitability and your return on ad spend (ROAS). If you’re spending money on customer acquisition costs (CAC), you want AOV to be high to maximize the revenue from your spend.
Businesses track AOV in marketing because it’s a straightforward way to evaluate your company’s financial health.
A high AOV means you’re making more money from the customers you currently have, and that helps you avoid spending a lot more to acquire new customers. A high AOV helps if and when acquisition costs rise: You have a bit of a buffer to protect your margins.
Of course, you can learn from a low AOV, too: It might mean there are opportunities for your business to improve engagement, loyalty, or conversion rate. Keeping track of your AOV allows you to continue to iterate and improve.
So, how do you calculate AOV? There’s a simple AOV formula to follow:
AOV = your total revenue / your total number of orders
For example, if you earned $2,000 in total revenue from 400 orders, your AOV would be:
$2,000 / 400 = $5
In other words, each customer spends $5 per purchase on average.
AOV varies widely across industries, product categories, and price points. But generally, if you’re able to increase average order value, you’re also able to increase revenue, so the higher your AOV, the better.
What makes a “good” AOV is influenced by a number of factors, including manufacturing costs, shipping costs, product bundling, and more.
It might help contextualize your metrics to know the typical AOVs in some popular industries. Here are the top five median AOVs in ecommerce, based on our platform data over the last 365 days:
It makes some intuitive sense that encouraging bigger orders would be a good thing. But there are several different reasons why AOV is important for ecommerce shops.
AOV looks simple on the surface, but interpreting it correctly requires looking beyond a single average. Ecommerce brands often combine statistical analysis and customer segmentation to understand what’s really happening in their order data.
Mean, median, and mode, also called the three measures of central tendency, are different statistical ways of showing you where the midpoint of a data set is.
A few high-value orders can skew your AOV (aka your mean) upward. Considering median and mode help to reveal typical purchasing behavior and synthesize your data from different perspectives.
Another way to avoid skewed data is by calculating your mode-to-mean ratio, or MMR. This is a percentage calculated by dividing your mode order value by your mean order value. You use the result to determine which measure of central tendency will be the best representation of your customers.
MMR = Mode / Mean x 100
When your MMR is between 67 and 100 percent, your mean order value will be a better representation of your customers. When it’s between 0 and 66, your mode order value will be a better fit. Then, you can use this insight to make changes to pricing, segmentation, and other factors that will ultimately improve AOV.
Customer segmentation is the process of grouping customers by a shared characteristic to help you understand their behavior better. And segmentation analysis can help you look at AOV more effectively. With detailed segmentation, you’ll be able to quickly identify patterns relating to AOV among your most loyal customers, your most effective channels, and your best-performing products.
Here's how to analyze AOV various ways:
By customer type: If your AOV is high with new customers, that tells you your acquisition efforts are paying off. If your AOV is high with returning customers, they’re likely to be loyal and engaged. That might be a clue that a customer engagement tactic like a loyalty program is effective, for example.
By channel: A high AOV for paid search means your ads are driving profits. A high AOV for email means your customer base is engaged. And a high AOV from organic search means people intend to make a purchase. All of these insights can help you tailor your marketing efforts and allocate your marketing spend effectively.
By product category: If certain products aren’t selling, it might be time to think about strategically lowering the price. On the flip side, if other products are consistently part of higher-value orders, you can consider adding those to a bundle as a way to nudge customers toward converting on a higher-priced package deal.
By customer cohort: Cohort analysis groups customers by purchase date, allowing you to track the behavior of the cohort over time. When you look at AOV through this lens, you’ll see how a cohort’s behavior changes over their relationship with your brand, allowing you to make decisions about when and how to market to customers at different stages of the customer lifecycle (called customer lifecycle marketing).
Like with many ecommerce metrics, you shouldn’t just calculate AOV once and then forget about it. Regularly tracking AOV helps you get a clearer picture of your success and where you have room for improvement.
Depending on your business’s goals, you may want to monitor your AOV daily, weekly, or monthly. Monthly is typical, but more frequently may be helpful when you’re just starting your business to keep a close eye on your progress.
You’ll likely want to track AOV weekly when you’re running promotions or launching a new product to see how you’re performing in close-to-real-time. Monthly tracking will give you a better picture of consistent trends.
You might even compare AOV annually to factor in seasonality. For example, you might look at how your AOV changes around Black Friday and Cyber Monday sales from one year to another to help inform your upcoming strategy.
Now that you have a deeper understanding of the AOV meaning, you’re ready to explore ways to drive more revenue. Here are some helpful tips for how to increase AOV in ecommerce, grouped by category.
Pricing strategies to increase AOV all have to do with, you guessed it, the pricing of your products. Raising prices on specific products can boost AOV, but it can also make shoppers hesitate. So, many pricing strategies rely on other ways of encouraging shoppers to spend more. Here are a few examples:
You can also motivate shoppers with merchandising techniques, such as encouraging them to add related items to their cart or upgrade what’s already in their cart to a higher-end version. Here’s how:
Personalizing the shopping experience can lead to larger order sizes. Leveraging past purchases or browsing behavior can encourage customers to add additional items to their carts. Here are a few ways to try that:
Promotional strategies typically rely on feelings of urgency and scarcity to drive customers to purchase more. Don’t underestimate the motivating power of the fear of missing out on a timely promotion or a special offer to drive up AOV. Examples include:
For a full breakdown of AOV improvement tactics, see our guide on how to increase average order value.
In the pursuit of higher revenue, it’s possible you may be making some mistakes along the way that could backfire and end up hurting your AOV or your profits.
One common misstep is called discount inflation. This is when you’re constantly discounting your products to keep people shopping during tough economic times when customers are otherwise cutting back on spending. If your offerings are nearly always discounted, you’ll cut into your profits over time, and train your audience not to pay full price.
Watch out for free shipping thresholds that are too low, too. If yours isn’t high enough, this perk won’t actually increase AOV, you’ll just be giving your customers the gift of free shipping. A good rule of thumb is to set a free shipping threshold about 5 to 15 percent higher than your current AOV, according to MarTech.
Pay close attention to data attribution, and make sure the model you’re using isn’t introducing errors that might skew your understanding of your AOV. For example, last-click attribution only gives credit to the final touchpoint in your customer journey and undervalues earlier stages of your marketing funnel. Triple Whale’s Total Impact Attribution Model can give you deeper insight into the effects of your campaigns at every stage and across all channels.
Finally, remember that a higher AOV alone isn’t the goal. Sometimes called cosmetic or vanity growth, inflated AOV without profitability gains won’t help in the long run. This can occur when you’re not aware of how much more you’re spending to drive those higher order values, such as with excessive discounting, low-margin upselling, or increased returns. That’s part of the reason it’s always a good idea to consider your AOV in the context of other ecommerce benchmarks.
Just like your customer data, your AOV can work harder for you when it isn’t siloed. You should consider it one metric of many that you track regularly, and analyze it in relation to several other benchmarks of success.
For example, it’s essential to compare your AOV with your contribution margins, because AOV alone ignores costs. If you focus solely on boosting your AOV without factoring in costs, you could end up cutting into profits.
Another way of looking at costs would be to compare your AOV and your CAC. You need to consider the money you spend on acquiring new customers when you think about increasing AOV, otherwise you could end up spending too much and hurting your margins.
Keep an eye on conversion rate, too. Sometimes upselling and bundling become too expensive, driving customers away, so AOV might increase while conversion rate decreases. The best case scenario is having both a high AOV and a good conversion rate for long-lasting customer loyalty.
Similarly, you also want a strong AOV and a strong CLV, or customer lifetime value. These metrics are similar, but CLV reflects the value of a customer to your company over an unlimited period, not just throughout one purchase, like AOV. Most of the time, the higher your AOV, the higher your LTV, too.
If this all sounds like a lot to manage, that’s because it can be. But you don’t have to shoulder the effort alone. There are many tools and apps that can help you navigate AOV.
AOV doesn't just play a big role in your business, it's the backbone. Improving this metric means you generate more revenue from existing customers, helping you to grow your business without throwing heaps of money at marketing and advertising.
AOV, or average order value, is your total revenue divided by your total number of orders. It gives you a window into customer behavior, allows you to understand purchasing habits, and points you toward strategies to make each sale more profitable.
It also directly affects your bottom line. A higher AOV means more revenue without having to increase spend on customer acquisition, service, delivery, or conversion.
But it’s also important to consider other key ecommerce metrics in addition to AOV to have the full context of how your business is performing, such as ROAS, LTV, and CAC. Here at Triple Whale, we can help with all of it: Our pre-built retention dashboards and AI agents monitor purchase patterns, predict lifetime value, and surface personalized recommendations that keep your most valuable customers coming back. Book a demo today!
AOV, or average order value, tells you how much money, on average, a customer spends per order with your brand. Tracking this number over time gives you a gut check on the financial health of your brand. Generally, a higher AOV means higher profitability, because shoppers are spending more.
AOV does not typically include taxes, shipping, or other costs. That’s one of the reasons why tracking AOV alone doesn’t give you the full picture of your brand’s profitability. It’s a good idea to analyze your AOV in relation to ecommerce metrics that track costs, such as your ROAS and your contribution margins.
Average order value is a measure of the value of completed transactions. ACV, or average cart value, is a measure of the value in a customer’s cart, whether or not that transaction is ultimately completed. ACV tells you more about intent than revenue.
Broadly speaking, a higher AOV typically means higher profitability. Customers spend more per order, on average, so you make more. But this is a bit oversimplified and isn’t guaranteed: You have to avoid falling into any common AOV traps that can hurt profits and monitor your AOV and other ecommerce metrics regularly to make sure you’re staying on track.
.webp)
Body Copy: The following benchmarks compare advertising metrics from April 1-17 to the previous period. Considering President Trump first unveiled his tariffs on April 2, the timing corresponds with potential changes in advertising behavior among ecommerce brands (though it isn’t necessarily correlated).
.webp)
.webp)
.png)
.png)
