Average Order Value

Average Order Value

To increase earnings and sales, data-driven companies must closely monitor the average order value (AOV), an e-commerce metric (KPIs).

It's helpful to know the average dollar amount spent per order across your business channels. It gives you a benchmark for understanding customer behavior and can help you build a marketing and pricing strategy to boost that value. You can take your business decisions easily. With a higher AOV, businesses can increase their revenue growth, get new customers, and make a solid customer base.

Here’s everything you need to know about average order value (AOV) and how to calculate your AOV.


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What is Average Order Value?

If you've ever wondered how much money your customers are spending on every order you place with e-commerce businesses, you've come to the right place. Customers' average order value (AOV) is one of the most important metrics for online retailers, as it influences everything from advertising budgets, store layouts, and product pricing. To better understand their customers' buying habits, online retailers use this metric as a yardstick.

Up-selling (providing expensive items that are an aversion to the same product), Cross-selling (providing complementary products), free delivery with a minimum purchase, volume discounts, and coupons are all ways to increase AOV for your business.

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How to calculate Average Order Value?

Divide your company's total revenue by the number of orders to obtain your average order value. To calculate AOV, sales per order are used rather than sales per customer. Even if a customer makes more than one purchase, the average order value is calculated separately for each purchase. Although it doesn't directly relate to gross profit or profit margins, the average order value shows how those numbers are calculated.

Average Order Value Formula


The Revenue ÷ the total number of orders = Average Order Value.

There were a total of 1,000 orders in a month for your online store's sales of $31,000. A monthly AOV of $31 was calculated by dividing $31,000 by 1,000.

What is a Good Average Order Value?

When it comes to online shopping, various online businesses and products offer a wide range of options for customers. An ecommerce store like Amazon has a higher average order value. The beauty industry has an AOV of $70, the health and fitness industry of $76, the fashion industry of $97, the general eCommerce of $97, and the home and garden of $353. So anything more than $76 is a good average value. But as always, it depends on shipping costs, transaction volume and profit margin. 

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What is a bad Average Order Value?

To increase your average order value, you should offer coupons, personalize customer experiences, improve digital marketing efforts or social media marketing, make your shopping cart functional, incorporate add-ons, feature product pages, and develop a mobile app. As a result, you'll be able to retain more customers.

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Average Order Value Best practices (How to increase aov)?

Here are some of the best practices you should keep in mind to achieve your target AOV

Return on ad spend cost best practices

step 1 icon Upselling or cross-selling complementary products

Customers are more likely to buy more if they see or hear about complementary products. If you mention which additional products go well together in your product descriptions, you're on the right track. Similarly, upselling is a great way to increase your average order value by promoting more expensive products that are an extended version of your existing products.

step 2 icon Providing Coupons

To get the most out of discounting your products, you need a long-term strategy in place. That way, you can get a better conversion rate. Customers who leave reviews, sign up for an email list, or refer friends should be given discounts. With a discount, you're likely to see an increase in Average Order Values (AOV). When you provide such incentives for a specific time period, more customers are attracted to your products.

step 3 icon Enhancing the e-commerce experience by making it more personalized

Increase your AOV by optimization, personalization, and targeting your customers' shopping experiences with data. It is possible to target specific customers by studying their purchase history and creating marketing campaigns that resonate with them. If you can target and personalize your marketing, clients are more likely to spend huge sums of money. For customer retention, you can also create a customer loyalty program. That will help you increase the customer lifetime value and create better relationships with them.

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