AOV meaning: what average order value is and how to calculate it

AOV means average order value: the average amount a customer spends in a single order. You calculate it by dividing revenue by the number of orders over the same period, for example a day, a week or a campaign.

AOV is one of three numbers that make up online store revenue, together with traffic and conversion rate. When sales change, it tells you whether people bought more often or spent more each time.

The AOV formula

AOV = revenue / number of orders

revenue  = what customers paid for products in the period,
           after discounts and returns, before shipping and tax
orders   = orders placed in the period,
           excluding test and canceled orders

The formula is simple; the definitions are where stores differ. Decide once whether revenue is gross or net of discounts and returns, and whether shipping and tax are in, then never change it quietly. A switch from gross to net can move AOV by 10% overnight with no change in customer behavior.

A worked AOV example

A store's Tuesday looks like this:

AOV = 4,640 / 58 = $80.00

Include the three removed orders and use gross sales, and you get $5,120 / 61, about $83.93. Same day, same customers, a different AOV. That is why a stated definition matters more than the formula.

Where AOV fits in store revenue

revenue = sessions × conversion rate × AOV

With 2,900 sessions, a 2% conversion rate and an $80 AOV, that is 58 orders and $4,640, the Tuesday above. Raising AOV to $88 adds as much revenue as raising conversion from 2% to 2.2%, and it is often quicker to try: a bundle or a free-shipping threshold takes an afternoon, a better checkout takes a project. It also means each paid visit earns more, which lets you bid more for traffic.

AOV vs ARPU, basket size and ACV

• AOV is per order. One customer with three orders counts three times.
• ARPU is per user over a period, so it rises when customers buy more often even if each order is smaller.
• Units per order (basket size) counts items, not money. If units per order rise and AOV doesn't, customers are adding cheaper items.
• ACV (annual contract value) is a B2B subscription term: the yearly value of one contract. AOV is per checkout, ACV per contract year, so the two only meet for businesses that sell annual plans through a store.

Look at the median too

AOV is a mean, so a few large orders pull it up. If one wholesale buyer places a $3,000 order on a day of $80 orders, AOV for the day jumps while nothing changed for normal shoppers. Check the median order value next to the average, or report wholesale and retail separately.

Common AOV mistakes

• Mixing gross and net revenue across reports, or across tools that define sales differently.
• Counting test, canceled or fully refunded orders as orders.
• Comparing AOV across currencies without converting at one rate.
• Celebrating a higher AOV from a discount. A "spend $100, get 15% off" offer can raise AOV and still lower margin per order.
• Comparing a promotion week with a normal week. Compare with the same weekday or the same period last year.

Related metrics

• ARPU: revenue per user rather than per order.
• CAC: the cost of winning a customer, which the margin on their first orders has to pay back.
• LTV to CAC ratio: AOV times orders per year times margin is the start of lifetime value for a store.

Track AOV automatically every day

The Shopify daily sales report skill computes yesterday's net sales and orders each morning in the shop's own time zone, leaves out test and canceled orders, and posts average order value as net sales (after discounts and returns, before shipping and tax) divided by orders, against the day before and the same weekday last week. Shopify top products shows which products drive those orders. With a Briefkin token set, each run updates the same card, so AOV builds a daily history chart without a spreadsheet.