Average order value, or AOV, is the average revenue recorded per order over a defined period. It helps ecommerce and sales teams understand transaction size, but it does not measure profit, customer lifetime value or the number of units purchased.
How is average order value calculated?
AOV = included order revenue ÷ included order count. The definition should state whether revenue is gross or net of discounts, returns, tax and shipping and which order statuses are included.
Illustrative AOV calculation
| Calculation step | Amount | What it means |
|---|---|---|
| Included order revenue | $240,000 | Revenue under the selected reporting definition |
| Included orders | 4,000 | Orders under the same period and status definition |
| Average order value | $60 | $240,000 ÷ 4,000 |
The $60 result is illustrative. Changing the treatment of cancellations, refunds, tax or shipping changes the metric.
How should AOV be interpreted?
AOV can rise because customers buy more, choose higher-priced products or face price increases. It can also rise while order volume or contribution margin falls. Review it with conversion, units per order, gross margin and repeat purchase behavior.
AOV vs. average selling price
AOV measures revenue per order. Average selling price measures revenue per unit sold. An order containing several low-priced units can have a high AOV while its average selling price remains low.
