What Is Average Order Value (AOV)?
AOV is the average amount customers spend per transaction. Increasing it is one of the highest-leverage moves in eCommerce.
Key Takeaways
- AOV = Total Revenue ÷ Number of Orders.
- Increasing AOV is often more profitable than acquiring new customers.
- Upselling, bundling, and free shipping thresholds are the most effective AOV levers.
The formula
Average Order Value is total revenue divided by the number of orders in a given period. If you generate £100,000 from 2,000 orders in a month, your AOV is £50. This single number has an outsized impact on profitability, because your fulfilment and acquisition costs are often fixed per order regardless of order size.
Why AOV matters so much
Acquiring a customer has a fixed cost. Shipping an order has a near-fixed cost. If that customer spends £30 instead of £60, you've roughly doubled the cost burden relative to revenue for the same effort. Increasing AOV spreads fixed costs across more revenue per transaction — improving margin directly.
How to increase AOV
Free shipping thresholds set just above current AOV (if current AOV is £45, set the free shipping threshold at £55) reliably push customers to add more to their basket. Product bundling increases perceived value and average spend. Post-purchase upsells and 'customers also bought' recommendations are effective in checkout flows.
Monitoring AOV over time
AOV should be tracked weekly and compared to the same period last year (to control for seasonality). A declining AOV might indicate a shift in product mix, a promotional period pulling in low-value orders, or a change in customer acquisition channel bringing in less valuable customers.