Growing an ecommerce business usually involves getting more people to buy or giving existing customers reasons to return. There's another opportunity inside the orders you're already receiving: helping shoppers find more of what they need in a single purchase.
Average order value shows how much those purchases are worth. It can help you understand your product mix, evaluate offers and see whether customers are buying one item or putting together a larger basket.
The metric is simple to calculate, but improving it takes some thought. A bigger order is most useful when it also leaves your business better off and gives the customer something they wanted. Here's how to measure AOV and use it to make better decisions.
What is average order value?
Average order value, or AOV, is the average amount spent per order. It describes the value of a transaction, rather than the total amount an individual customer spends with your brand.
If one customer places three $40 orders, those purchases contribute $120 in revenue and three orders to your calculation. Their AOV is $40, even though their total spending is $120.
This makes AOV useful for understanding what happens at checkout. It can tell you whether a new bundle is increasing basket size, whether shoppers are choosing more expensive products or whether a promotion is bringing in smaller orders.
How to calculate average order value
The basic formula divides revenue from orders by the number of orders in the same period:
Average order value = order revenue ÷ number of orders
Suppose your store generates $120,000 in product revenue after discounts from 1,500 orders during a month. Your AOV is:
$120,000 ÷ 1,500 = $80
Use a consistent revenue definition so you can compare results over time. For example, Shopify calculates AOV from product sales minus discounts at the time the order is placed. Its calculation excludes shipping, taxes and later adjustments such as returns or exchanges.
That makes the report a view of the initial purchase. Returns still matter to your business, so review them alongside AOV when judging whether an offer is working.
How AOV differs from other customer metrics
Several ecommerce measures describe customer spending, but they answer different questions. Keeping them separate helps you understand what changed when sales move.
| Metric | What it tells you |
|---|---|
| Average order value | How much revenue you receive per order |
| Average selling price | How much you receive per item sold |
| Units per transaction | How many items customers buy in an order |
| Purchase frequency | How often customers order during a defined period |
| Customer lifetime value | The value of a customer relationship across multiple purchases |
A store can have a modest AOV and still build valuable customer relationships through frequent purchases. A $35 coffee refill every month is a different business from a $400 appliance bought once every few years.
Likewise, a higher AOV might come from selling more items or from selling a more expensive mix of products. Looking at units per transaction and average selling price helps you distinguish those changes.
For the longer view of the relationship, our guide to customer lifetime value explains how repeat purchasing fits into the calculation.
Why average order value matters
A higher AOV can help you earn more revenue from the traffic and customers you've already attracted. If order volume stays constant, a 10% increase in AOV produces a 10% increase in order revenue.
Some costs also don't rise proportionally with the basket. Packing a compatible accessory alongside the main product may cost less than fulfilling a separate order later. That creates room for a larger purchase to improve contribution as well as revenue.
The actual result depends on the products and offer. Consider these illustrative orders:
| Single-product order | Larger bundle | |
|---|---|---|
| Revenue after discounts | $60 | $80 |
| Product and other variable order costs | $36 | $53 |
| Contribution before acquisition and overheads | $24 | $27 |
The bundle earns $20 more revenue and $3 more contribution. Both improve, but by different amounts. Including contribution margin in your reporting makes it easier to see how much of the larger basket your business keeps.
What is a good average order value?
A useful AOV target starts with your product range, pricing and typical customer needs. Comparing a refill brand with a furniture retailer won't tell either business much about how well its offer is working.
Industry benchmarks can provide context, especially when the stores in the comparison sell similar products at similar prices. Our ecommerce AOV benchmarks include a category breakdown to help you make that comparison.
Your own order distribution is often more actionable. Look at the most common basket values, how many customers buy multiple items and which products regularly appear together. A handful of very large purchases can pull the average above what most customers spend.
That information gives you a better basis for choosing a bundle or shipping threshold than taking a fixed percentage of the overall average.
Five ways to increase average order value
The strongest opportunities make a larger purchase useful or convenient for the customer. They connect the additional spending to something the shopper already wants to accomplish.
1. Build bundles around a complete use case
A bundle can save someone the work of choosing several compatible items. A coffee brewing kit might include a dripper, filters and a suitable bag of coffee. A skincare set might bring together the products needed for a particular routine.
Show what's included and why the items belong together. If you offer a discount, make the savings clear and check the contribution after that discount. Customers should also be able to understand how the bundle compares with buying the components individually.
2. Recommend additions that fit the main purchase
Cross-selling works best when the extra item has an obvious relationship to the product in the cart. A matching pillowcase makes sense alongside bedding. A compatible charging cable makes sense alongside a device that needs one.
Keep recommendations selective and easy to decline. Too many options can interrupt a customer who's already decided what they want, particularly on a small screen.
3. Explain the value of a higher-priced option
An upsell helps a shopper decide whether a more capable, durable or convenient option is worth the difference. The explanation needs to be specific: a larger capacity, a different material or an included accessory.
Simple comparisons help customers choose without having to open several tabs. Retain an easy route to the original option so the upgrade feels like a useful choice.
4. Test a sensible free-shipping threshold
A shipping threshold can give customers a reason to add another item, provided the gap is achievable and the extra purchase is relevant.
Start with common basket values and the prices of suitable additions. If many shoppers spend around $50 and you sell useful $10 accessories, a threshold near that next step may be worth testing. Include the shipping subsidy and any extra fulfillment costs when evaluating the result.
The cart should explain how much remains to qualify and update accurately when products, quantities or discounts change.
5. Offer larger quantities where customers benefit
Multipacks and larger formats can suit products customers use regularly. They may offer a better unit price, fewer reorders or a convenient way to stock up.
Make quantities and unit pricing easy to compare. For products with a limited shelf life or irregular demand, a smaller purchase may be the better fit. Encouraging the right quantity helps protect the customer's experience and their willingness to return.
How to evaluate an AOV improvement
Before changing an offer, decide what success would look like across the whole purchase. AOV, conversion rate and contribution per visitor are a useful combination because they show basket value, order volume and the money earned from the traffic.
Watch returns and subsequent purchases too. A large multipack might increase today's AOV while lengthening the time until the customer needs another order. That may be a good outcome, but it changes how you interpret repeat purchase frequency.
Where possible, compare the new offer with the existing one over the same period and similar traffic. Then look at the complete result: more useful products sold, healthy contribution and an experience customers remain happy to repeat.
Final thoughts
Average order value helps you see the opportunity within each purchase. Used well, it guides you toward bundles, recommendations and offers that make shopping more useful for the customer and more rewarding for the business.
The best improvements feel like a natural extension of what someone came to buy. Customers leave with a purchase that suits their needs, and your store earns more from helping them make that choice.
