Average Order Value (AOV)

AOV defined

Average order value is intended to represent the dollar amount of your average customer’s payment. At its simplest, AOV is represented as [Total Sales] / [Total Orders]. So if you made $1000 in total sales in a month on 100 orders, your AOV would be $10 for that month.

Why is it useful?

AOV can be useful for a variety of reasons, a few of which are:

  • Understanding what your typical customer expects to spend with your business, which informs:
    • Insight into whether your pricing is appropriates
    • Understand how customers from different channels differ in their spending habits
  • Calculate the profit you make per order, which in turn informs:
    • How much you should be willing to pay to acquire an order through marketing
    • How much you can offer in discounts without being unprofitable

Diving deeper

After getting comfortable with the basics, there is a ton of additional analysis that you can perform on AOV in order to better understand your customers and your business.

  • Different components of AOV (product price and quantity, shipping costs, taxes)
  • Changes in AOV (effects of seasonality, product mix, pricing, loyalty programs)
  • Relationship between AOV and conversion rates (usually caused by pricing, but not exclusivelys)
  • Behavioral differences between high-AOV customers and low-AOV customers
  • Comparing AOV to Median Order Value, to understand how much AOV is skewed by high (or low) spending customers


AOV is a fairly important metric, especially in early-stage ecommerce businesses. Investors will almost always ask for it given both its applications and implications. When high-level sales or usage metrics change, it’s often a key element in helping teams find the root cause.

  1. 1. AOV defined
  2. 2. Why is it useful?
  3. 3. Diving deeper
  4. 4. Conclusion